Morning, everyone, and welcome to Jardine Matheson's 2025 Interim Results Webcast. Thank you for joining us today. I'm Graham Baker, Jardines CFO. You should be able to see the slides on your screen and the Q&A icon at the bottom. Please submit your questions at any time, and I'll answer them at the end of the presentation. We have five things on the agenda today: a brief recap on our new investment proposition, strategic updates across the group, reviews of the financial performance of both the group and our key portfolio companies, and finally, the outlook for the full year. We'll end the session, as usual, with those Q&A. In March, we shared Jardines new strategic focus as an engaged, long-term investor. Our goal is to deliver strong, sustainable returns for our shareholders, capital appreciation, and income from investments in leading Asian businesses.
Over the last few years, we've worked with our portfolio companies to establish highly qualified boards, robust management structures, and strong leadership teams. The companies have now either established or are in the process of establishing clear strategies to drive long-term growth and value, and we've put in place incentive structures and board expertise to support delivery. Similar changes have also progressed at Jardines, where we can now focus on portfolio management at the corporate level, capital allocation, and building expertise to make new investments.
While we've moved away from being an owner-operator, our values remain unchanged. We continue to believe that superior shareholder value will always be supported by integrity, robust risk management, including strong balance sheets and excellent access to financing, and a commitment to sustainable business practices. In May, we announced the appointment of Lincoln Pan as Jardines new CEO.
Lincoln will take over on the 1st of December. He succeeds John Witt, who will retire at the end of November after a successful 32-year career at Jardines. Lincoln joins from PAG, where he was co-head of private equity and a member of the Group Executive Committee. His successful track record as an investor in the Asia-Pacific region and experience working with company boards and management teams perfectly qualify him to lead Jardines as we look to further advance our capabilities and build bigger, stronger businesses for the long term. We also strengthened the company's board in the first half of the year with the appointment of two new independent non-executive directors. Ming Lu, senior advisory partner at KKR and previously its chairman Asia-Pacific, joined the board in February, and Tim Wise was appointed in May.
Tim's a partner at Simon Robertson Associates, a leading independent corporate advisory firm, and was previously chairman of JP Morgan Cazenove. With Ming and Tim's appointments, Jardine Matheson's board now has a majority of independent non-execs in line with the U.K. corporate governance code. Turning now to strategic developments across our portfolio, Hongk ong Land's sale of the top nine floors and selected retail space of One Exchange Square to the Hong Kong Stock Exchange is an important transaction in several ways. It secures a key player as a permanent occupant of One Exchange Square and thus, of course, reinforces Central's status as Hong Kong's financial hub. It also marks Hongk ong Land's progress in advancing its strategy, recycling capital in order to reinvest and unlock shareholder value.
During the first half, Hongkong Land commenced a $200 million share buyback program, of which two-thirds had been completed by the 28th of July. They're also making good progress on the Tomorrow's Central transformation in Hong Kong, as well as the West Bund Central development in Shanghai. West Bund is expected to be completed and launched in stages starting from the second half of this year. DFI Retail also made very good strategic progress in the first half, moving forward at pace on portfolio simplification. It completed sales of its stakes in Yonghui and Robinsons Retail and announced the disposal of its Singapore food business. As well as enabling a significant return to shareholders in the form of a special dividend, simplifying the portfolio is a key enabler to prioritizing future focus on high-margin growth businesses and initiatives.
At Astra, Toyota invested $120 million for a 40% interest in Astra Digital Mobil, which owns OLXm obbi, Astra's leading Indonesian online-to-offline used car business. The partnership will expand OLXm obbi's business by leveraging Toyota's dealership network across Indonesia. In the mining business, United Tractors acquired a further stake in Supreme Energy for $31 million, taking its ownership of Supreme's geothermal project in South Sumatra to 40.4%. In July, Astra also signed a conditional agreement to acquire 83.7% of Mega Manunggal Property, a Jakarta-listed industrial and logistics developer, as part of their strategy to serve Indonesia's rapidly growing demand for industrial and logistics infrastructure.
Finally, following resilient performance over the past few years, Astra's management has commenced a comprehensive portfolio review to identify and assess initiatives to enable the continued delivery of future growth and value in changing market conditions.
The output from this review is expected in the first half of 2026. To avoid any misunderstandings here, let me be clear that Jardines, of course, continues to view both Indonesia and Astra as strategic growth drivers and core long-term components of our portfolio. Jardines input to the Astra review will, of course, be led by our Southeast Asian team at Jardine Cycle & Carriage, as well as leading here, JC&C, commenced strategic reviews with its other portfolio companies, which are also expected to complete in the first half of next year. Mandarin Oriental added four new hotels to its portfolio in Paris, Amsterdam, Venice, and Malaysia, and announced new management contracts in Puerto Rico and Suzhou, China. It also announced significant investments in its historic Hong Kong and Bangkok hotels.
Just a reminder, we encourage all portfolio companies to build strategies which will see them continue to grow sustainably for the long term. As we shared earlier this year, we've been pleased to see their progress recognized with improved ESG ratings, and this has, of course, translated into improved ratings for Jardine Matheson as well. Turning now to financial performance. Overall, the group's underlying net profit grew 45% against the previous year to $798 million. The first half of last year saw significant impairments at Hongk ong Land on its build-to-sell inventory on the mainland, so we're mainly focused on the 11% higher result excluding Hongk ong Land's 2024 impairments and at constant exchange rates, which we see as solid performance. I'll provide a few more perspectives on that in a moment.
Total group revenue for the first half was $17.1 billion, slightly below the same period last year, principally as a result of lower revenues, again from Hongkong Land's build-to-sell business. Underlying EPS was $2.73, a 43% increase from the same period last year, or 10% up excluding those Hongkong Land impairments and at constant exchange rates. We've declared a stable interim dividend of $0.60. Breaking down the 11% underlying growth before impairments at CER, this reflects both underlying organic growth in our portfolio companies, which was 7% at constant FX, and investments made to grow our stakes in the portfolio companies, which contributed 4% to underlying profit growth. I'll briefly now go through the contributions from each portfolio company.
Starting with Astra, their profits were down 4% at their level in local currency due to lower contributions from the coal and four-wheeler businesses as coal prices moderated and the auto market contracted. However, Astra's contribution to Jardines was down just 2%, as this was where the majority of the benefit from increased shareholdings was recorded. Hongk ong Land's results were up 3% on the prior year, adjusted for the impairments taken in the first half of last year.
Dairy Farm's earnings showed strong progression supported by improved health and beauty profitability, higher contributions from associates, and lower financing costs. Jardine Pacific improved significantly with solid performance in the B2B engineering businesses and the B2C businesses returning to profitability. Zhongsheng's contribution was 5% lower, reflecting the ongoing pressures on new car margins due to oversupply of EVs and other vehicles in the mainland new car market.
JC&C benefited significantly from foreign exchange gains and lower financing costs at the corporate level. Marginal growth at Mandarin Oriental reflected JM's increased shareholding following share purchases last year. Corporate charges were 39% lower, principally due to lower head office costs and higher investment income. I should also note a few things as a result of our increased focus on shareholder value. Firstly, that TSR has picked up this year to a significant degree. This reflects funds flows returning towards emerging markets and Asia more broadly. It also reflects some signs of a brightening outlook in Hong Kong. However, I believe it's also been driven by positive responses to progress at our portfolio companies, in particular Hongk ong Land and DFI. This is encouraging. Secondly, while we're pleased to see improved five-year TSR, it does not yet exceed our cost of equity.
So while we're marginally ahead of MSCI Asia Pac ex Japan over the same period, we don't yet believe that this constitutes superior returns. Indeed, the 7.5% five-year TSR at the half year started at the onset of the COVID pandemic in 2020, and by the end of this year, the five-year TSR will look back to a point in time where Jardines had a share buyback in place. So we're far from declaring victory on the work we need to do to deliver sustained shareholder value. Finally, I'd like to note that we also have earnings and dividend growth on this slide. Ultimately, success in delivering superior returns over the long term will stand or fall on our ability to build bigger, stronger businesses, make smart investments, and recycle capital effectively. While early progress is promising, much of the hard work of delivery lies ahead.
It's important, of course, we give time to Lincoln to form his views on all these matters as he brings his expertise to the group later in the year. Returning to the numbers, outside underlying earnings, the group recorded a net non-trading loss in the first half of $270 million, down from $590 million in 2024. The largest non-trading item continued to be fair value losses from the revaluation of investment properties. However, the first half loss this year, primarily on Mandarin's One Causeway Bay development, was significantly smaller than the prior year as the valuation of Hongk ong Land's central portfolio stabilized.
The net loss on sales of business and other property interests recognized DFI's disposals Yonghui and Robinsons Retail, and at the bottom line, the group reported a net profit attributable to shareholders of $528 million, compared with a net loss of $40 million in the first half of 2024. Group cash flows from operating activities were $2.6 billion, down 14%, primarily as a result of temporary movements in working capital in Astra and lower dividends from Astra's associates in joint ventures. Investing activities generated a net inflow of $416 million, mainly due to the proceeds from the sales Yonghui, Robinsons Retail, and the first three floors of One Exchange Square. Capital expenditure within our portfolio companies was stable and continues to be our highest priority deployment of capital.
Higher cash outflows on financing activities mainly reflected net repayments of borrowings at DFI, Hongk ong Land, and Jardine Matheson Corporate. The group has over $12 billion in liquidity headroom to finance future growth. Overall, the group's portfolio companies continue to be highly cash-generative, supported by strong balance sheets and access to considerable liquidity. Turning now to the group's balance sheet, net borrowings, excluding Astra's financial services companies, fell by $1.6 billion- $5.8 billion, and gearing reduced by 3%- 11%. This was driven by debt reductions at almost all portfolio companies, in particular DFI, where disposal proceeds strengthened the balance sheet to a net cash position of $442 million. The move to a net cash position at JC&C reflected continued strong cash inflows in Astra.
Now turning to Jardine Matheson's corporate balance sheet and cash flows at the parent company level, we continue to prioritize reducing net debt to build capacity to support future growth. Net dividend income rose 6%, and cash cover for the Jardine Matheson dividend remained at two times. Lower share purchase outflows saw net debt fall to $1.1 billion at the half year, and we plan to retain our 77.5% share of DFI's recently announced special dividend. Parent borrowings are financed by 10 and 15-year bonds totaling $1.2 billion, issued in 2021 at an effective interest rate of 2.6%. Excluding the bonds, the parent company was in a small cash surplus at the end of June. I'll now briefly go through the performance of each portfolio company. For details, please refer to their respective companies' results briefings, which you can access on the Jardines corporate website.
Starting with Astra's financial performance, I remind you that the group holds its interest in Astra through JC&C, and the numbers on this slide reflect the contribution made by Astra to JC&C, which was down 8%. This reflected Astra's local currency earnings down 4% and adverse movement of the IDR against the U.S. dollar. Heavy equipment decreased to $143 million due to lower contributions from coal mining and mining services, partly offset by improved gold and higher heavy equipment sales. The automotive segment's contribution fell due to lower sales volumes in a weaker national auto market, although the group's market share for both cars and motorcycles remained resilient. The used car business saw profits increase. Astra's financial services reported a higher contribution, reflecting larger loan portfolios as it continued to build its multi-finance secured lending business despite a declining new car market.
There was a 56% increase from agribusiness, mainly due to higher crude palm oil prices, and Astra's infrastructure business also reported a 35% increase in contribution as traffic volumes and toll tariffs rose. At Hongk ong Land, excluding the impact of impairments, underlying profit increased by 11% in the first half. Profits from the prime properties investment segment declined by 13%, primarily due to lower office rents in Hong Kong and temporary disruptions in retail caused by the transformation works at The Landmark for Tomorrow's Central. Mainland China retail saw softer performance with reduced rental income from Macau. Despite these headwinds, the ultra-high net worth segment remained very resilient. The Hong Kong office portfolio showed encouraging signs driven by improvements in capital market sentiment, with a rise in leasing inquiries and a decline in vacancy on a committed basis.
Negative rental reversions, however, resulted in average office rents decreasing on a year-on-year basis. The Singapore office portfolio continued to perform well, registering positive rental reversions. Contributions from build-to-sell rose year-on-year, driven by strong contributions from residential projects in Singapore, aided by the completion of a large-scale executive condominium development. On the Chinese Mainland, contributions from property sales also rose, excluding non-cash impairments, due to the timing of project completions. However, sales momentum in China remained below expectations despite extensive government stimulus efforts. Will remain a key focus moving forward.
Turning now to DFI. DFI reported a 39% increase in underlying net profit, benefiting primarily from higher contributions from associates and health and beauty, as well as lower financing costs. The health and beauty business reported 6% profit growth, reflecting strong sales growth in both the Mannings and Guardian businesses.
Convenience profits were lower than the same period last year, primarily due to a one-off gain in the prior year from the sale of cigarette inventory in Hong Kong ahead of tax increases. Among associates, Maxim's reported improved underlying profits, underpinned by cost optimization and operational efficiencies. Associate contributions also benefited from the disposals Yonghui and Robinsons Retail. Results for Dairy Farm's food division improved on a like-for-like basis in the first half.
The home furnishings business continued to face challenges due to intense competition and shifts in basket mix, but effective cost control measures supported a recovery in underlying profit. Dairy Farm recently announced a special dividend to be paid in the second half of the year, funded from the proceeds of business disposals. As already mentioned, JM's share of the dividend will be used to reduce corporate net debt, thereby providing investment flexibility for the future.
Jardine Pacific reported an underlying net profit of $67 million, a 30% increase driven by improved performances across most businesses. Schindler's improved contribution reflected stronger performances in service and repairs and reduced losses from new installations. Gammon's performance was driven by stronger margins, partly offset by higher overheads and lower finance income. Its order book showed improvement in the Q2 , despite challenging competitive conditions.
JEC saw higher sales and margins in Hong Kong, although regional businesses faced margin pressures. Its order book remained stable, although new orders were lower. Hactl saw lower profits as a result of higher rebates and increased staff costs, despite stable cargo volumes. While market share remained strong, the uncertainty remains on the impact of U.S. tariff changes. We were pleased to see Jardine Pacific's B2C businesses return to profitability.
Jardine Restaurant achieved a significant year-on-year improvement, making a small profit thanks to a structured transformation program. Zung Fu also reported a small profit, despite a challenging trading environment, driven by lower operating costs and reduced financing costs as inventory fell. We recorded 5% lower underlying profit from our 21% interest in Zhongsheng at $60 million, based on estimated results for the first half. Amid persistent challenges in China's auto market, Zhongsheng's new car sales continued to face volume and margin pressures.
JC&C reported an underlying net profit, excluding Astra, of $73 million, up from just $3 million in the prior year. The recovery was primarily driven by a $33 million gain on translation of foreign currency corporate loans, compared to a loss of $28 million on the same loans in the first half of last year. Lower corporate net debt also reduced net financing charges.
In their portfolio, there were lower contributions on a combined basis from Indonesia and the group's regional interests, but an improved result in Vietnam. In Indonesia, both Astra and Tunas Ridean reported lower contributions, with Tunas' drop in profits mainly due to lower contributions from auto and consumer financing. Among the group's regional interests, the disposal of Siam City Cement in the second half of 2024 contributed to the decrease in profits, but this was offset by stronger earnings from the Cycle & Carriage business, which saw its contribution double. In Vietnam, JC&C's businesses were up 17% from last year, stronger auto sales in THACO and higher earnings from REE's power generation business were the main contributors. Turning finally to Mandarin Oriental, underlying net profit rose by 6% to $24 million.
Owned hotels, particularly in Hong Kong and Geneva, delivered strong growth in underlying profit, more than offsetting a reduced contribution from Paris following its disposal in mid-2024 and a lower contribution from London. There was also a 14% increase in hotel management fee income due to RevPAR improvement, margin optimization, and portfolio expansion. However, this was offset by lower branding fees and continued investment in capabilities to support Mandarin Oriental's long-term strategy. Looking ahead, Mandarin Oriental has a strong development pipeline of 30 hotels and 19 residences, working towards its target of doubling its portfolio. To conclude and recap, the group delivered a solid performance in the first half. Most of our portfolio companies showed improved performance and continued to execute their new strategies. DFI made good progress simplifying its portfolio.
Hongk ong Land advanced key projects in Hong Kong and on the Chinese mainland, and Mandarin Oriental expanded its global portfolio. At the Jardines corporate level, we continue to prioritize deleveraging to enhance our ability to invest in future growth. Looking forward, while we're pleased with progress in the first half, for the full year, we continue to expect results broadly in line with last year, excluding the impact of Hongk ong Land's impairments in 2024. The implied slowdown in the second half primarily reflects recognition of significant build-to-sell profits on completed projects in the second half of last year, also in Hongk ong Land. With strengthened leadership teams in place, executing new strategies across our portfolio companies, we believe that Jardines is well-positioned as an engaged investor to take advantage of opportunities for mid and long-term growth.
Finally, on a couple of personal notes, I'd very much like to welcome Lincoln to Jardine Matheson as our new CEO. He's very modest, so I don't say this for his benefit. However, my strong sense is that he has absolutely what we need to take Jardines forward, and I'm very much looking forward to working together at this exciting time. I'd also like to extend my very warm wishes and congratulations to John, both on his many achievements at Jardines over a distinguished career and for whatever he chooses to do in the years ahead. I could have had no better teacher to learn Jardines from than him. With that, thank you, and I'll now take your questions. Please press the Q&A button on your screen. I'll give a few moments for you to do so. And, of course, we have one or two that have come in already.
So while you're pressing that Q&A button and putting a few more in for us, I'll start with a question from Carl at JP Morgan. Thank you, Carl. Recently, Jardines appointed Lincoln Pan as a new CEO. First, why Lincoln? What made him stand out in the selection process? And given Lincoln's background at PAG, what strategic changes should we expect under his leadership? Okay, so like all good questions, Carl, you're trying to get three for the price of one, but that's okay. So look, why Lincoln? Obviously, the process was led by our chairman, who also, of course, represents our largest shareholder. So as you can imagine, they were looking for somebody who would bring a very strong investment track record, very good knowledge and understanding of the markets that we operate in, and some other ones across Asia.
So I think that the first selection criterion was very clearly going to be around success and expertise, the sort of discipline that you would expect from a very senior, successful private equity executive. But I think the other part of the search, having talked with Ben and, of course, having now met Lincoln a little bit and got to know him a little bit, I think there's a personal side to it as well. There are plenty of smart, successful people in private equity, but you also need to have the right touch, the right touch with people, the right touch with partnerships, the right understanding of building leadership teams and capabilities, and working with broad, diverse organizations. And I think that Lincoln stood out on both criteria. It was a long search.
It started with both internal and external candidates, and it took quite some time, but he absolutely stood out. Obviously, I wasn't involved in the process directly myself, but both through discussion with Ben and others, I'm absolutely clear that Lincoln was the strongest and the standout candidate. In terms of his background, what strategic changes should we expect under his leadership? Well, I think the first thing to say is you should expect him to be here with me, conducting these interactions with our public shareholder base going forward. He's already expressed a very keen interest to be better connected with our shareholder base together with me, and I think that's great. And so early on, he will probably spend some time listening to shareholders and interacting with the wider community to listen, as well as provide his views and thoughts.
As I said, I think the key things that we're looking for in the early days are some discipline, some challenge, some thoughts about how we can improve, and it's clear that in doing something that is entirely new for the group, we're not looking to just do the same things that we've done in the past. We want somebody who can come in and challenge us and lift our game, and I'm confident that he will do that. In terms of broader strategic changes, look, I think we need to give him time to get his feet under the table. I think he is going to want to invest. I think he is going to want to drive growth. I think that he is going to want to continue ensuring that parts of our portfolio all pull their weight and perform.
And beyond that, I think I'm just going to say, "Watch this space, Carl." So I don't think there'll be too many surprises there. We haven't got too long to wait until he's on board, and I can assure you he's the kind of guy that works at great speed. So I think he'll be in the fray quite quickly. You did have a further follow-up on our strategic priority for deleveraging, and we're already seeing solid results in the first half. Going into the second half, is the strategic priority the same? And for 2026, what would be the direction in particular? What's the latest strategy on capital recycling? Well, look, a number of our portfolio companies have already made clear their strategy, and those already involve significant portfolio recycling activities. And as I'm sure you're well aware, those are far from at an end.
Anywhere in our group, there is plenty left to do. And as I mentioned with Astra and some of the businesses down in Southeast Asia, that strategic review process is just beginning. In terms of our own corporate priorities, look, the pause on our JM buybacks at the JMH level for neutralization of Scrip, I think I was clear on that, that that's a full year results for last year, that that was just a temporary pause until we clear our balance sheet. I believe we will go back to that. Obviously, it will depend on value and a number of other criteria and what opportunities we have in front of us. But I think you should assume that, as it was in the past, neutralization of Scrip will probably come back once we have got to that clean parent company balance sheet.
And as you've seen, we're making some good progress with that. We're not done yet, but I am pretty focused on making sure that when my new boss starts, we do have plenty of opportunity for him to start looking at places where we can invest. So I don't think that that deleveraging process at the parent is likely to continue indefinitely, albeit that as capital recycling happens, you know, we will continue to think about what we do with the proceeds, and our priorities will remain building bigger, stronger businesses and investing for long-term growth and value. Move on to another question that's in from Geoff at CLSA. Thank you, Geoff. Actually, that's a very similar question. Has JM thought differently in terms of capital allocation priorities? Look, I'll just remind everybody of what our capital allocation framework as it stands today is.
We start with our first priority is for investment to meet the capital expenditure needs for growth and value in our organic capital expenditure needs in our portfolio companies. The second is to support the dividend and its progressive growth with earnings. And then the third is that we think about M&A opportunities inside the portfolio and outside the portfolio on a level playing field. We think about where's going to drive growth and value for the long term. We think about the risk aspects of those. We think about the value aspects of them. I think it is fair to comment, though, that, of course, bringing Lincoln in, everybody should understand that while Jardines track record in recent M&A has not been so distinguished, and indeed, we actually haven't done an awful lot of corporate M&A at the parent level other than deepening investments in internal portfolio companies.
Bringing Lincoln in, of course, gives us the opportunity to refresh that. I think one of his first priorities is going to look at the quality of our investment teams and probably build new capability there. And with that, you should expect that we will go back to looking at those external opportunities with every bit as much interest and force as we've looked at internal opportunities over the last few years, so I think that's the only thing that I'm going to say at this point in time. You understand I don't want to hem us in at this point, but our capital allocation framework at this point in time remains pretty much intact. Lincoln may want to connect with that and make some things more explicit as we go forward, but that's something that we just need to look forward to in the future.
So a question from Raymond at HSBC. Thank you, Raymond. From your perspective, will there be any change in terms of investment approach and style? Look, I've had this question a number of times. You're bringing a PE executive in as your new CEO. Do you think you're turning yourself into a PE house? Look, Lincoln's a very smart guy. I think he understands, and I think he's actually really excited about the opportunity to work with Jardines. And when you get to talk to him, I expect that you'll hear that from him. One of his main motives for rejoining us was the excitement that he sees in the opportunity ahead. But I think he, like our other board members who've joined Jardines over the last year or so, including from a PE background, understand that Jardines isn't a private equity house.
We're long-term investors looking to build bigger, stronger businesses. We are ready to recycle capital. We have moved well beyond the era of never sell, and we will make those decisions based on value, growth opportunity, and whether we can see ourselves building value or whether there's somebody else out there that will be a better owner of businesses. So he will look at recycling within the portfolio, and that I think is already embedded, but there may be a new wave of discipline and focus and rigor in the way that we do that. And then in terms of the investment style of the question, look, I think we're not fixed-term investors. We don't have to deliver a return within a fixed time frame. I think that's actually one of our key advantages.
We've set a very clear TSR objective over a five-year period that was purposeful in highlighting that we're not going to sit on our hands and say everything's going to come good in 30 years' time. So we have got the clock ticking on us, but we're not forced to make decisions based on a sort of Damocles that can come down on a particular date. And of course, we bring long-term relationships and the ability to bring partnerships with entrepreneurs, with other investors across the region that I think are still going to be hallmarks of the way that we invest. So I would hope that Lincoln will increase our clock speed on investing, whether we do lots of small deals or whether we do a smaller number of big deals. That's all for opportunity and further discussion and evaluation.
But I don't think we're going to be doing 70 deals a year. We're far too modest to imagine that we're going to set ourselves up in competition to the big PE houses who know their business far better than we do. So I think that there's going to be some points of improvement and rigor and discipline, but I think that the fundamentals will also be recognizable, at least for a period of time. Another question from Raymond. Company delivered good profit growth in the first half, but guided a flattish earnings for the full year. What are the key reasons behind that? Okay, thanks, Raymond. That's a great question, and I appreciate you asking that because, of course, there are always a few moving pieces in there. Look, the reality is we're a little bit ahead of where we thought we would be at the half year.
It's actually quite good. Set of first half results, good performances across all the units, and if that were to hold all the way through to the end of the year, I think we'd probably be looking at a modest upside. We know that there's going to be a significant slowdown in Hongkong Land between its first half and the full year because the West Bund and a number of other premium build-to-sell developments released their residential components for final sale in the second half of last year, and therefore, having handed over the keys, we recognize the profits on those, and that big bolus of BTS build-to-sell project is not going to repeat in the second half of this year.
So there will be a drag on growth in the second half of the year, and that pulls us most of the way back down to our guidance for the year. The last piece, of course, is that there's still quite a lot of uncertainty out there. You'll see that although they didn't book anything like the scale of impairments in the first half that they booked in the first half of last year, there were still a few inventory true-ups in Hongkong Land in the first half of this year. And as I've noted, the conditions on the mainland are still pretty tricky. And so as we go into the second half of this year, there's probably still a little bit more to look at in the essentially inventory valuation on some of those residential properties in build-to-sell. And let's be clear about it.
We're in a pretty uncertain time in markets right now. There are very few direct impacts from the international global geopolitical tensions that are going on in the moment. We don't import or export very much to and from the United States at Jardines at all. But of course, we are exposed to the impacts of those on wider prosperity. And so with the smoke only just starting to clear on what the tariffs are going to be, those wider economic impacts are even more complex to get to. So we don't know any of that yet. Right now, the impacts of us have sort of been through FX, and they've been a little bit favorable through a strengthening Singapore dollar, primarily in JC&C. And that may continue for the rest of the year, but it's also seen a slightly weaker Indonesian rupiah.
So look, it's very hard to predict the mix of foreign exchange impacts. But overall, in holding guidance, I would say, look, I can certainly see upside possibilities, but I think it would be premature at this stage to say that the year is done. And so we're going to continue to watch very closely. I'm going to go on to a question from John at UBS. Actually, a couple of, oh, I think we've got three from John. So okay, we'll have a moment with John. How will Jardine Matheson drive growth in future other than capital recycling? Well, of course, all of our portfolio companies have that as their objective. Their strategy is around recycling. Obviously, some of the early stuff is around changes to portfolio, moving on relatively obvious and straightforward decisions. What lies ahead of us is two things.
Sometimes some more marginal decisions about whether businesses fit within the portfolio or not, whether they can deliver great returns. And obviously, as builders are stronger, bigger, better businesses, we want to give the new stronger management teams the chance to drive those performance improvements. And by simplifying portfolios, they get more focused on those objectives. But of course, we have to take, as an investor, we have to take an objective and disciplined appraisal of that ourselves. And that brings us back to our portfolio management and investment objectives at the Jardines level. And again, our decision to bring in a pro investor as our leader and some of the work that we have ahead of us around building capability that he will lead and around looking once again through those portfolio decisions and balances.
Overall, I think that there's the opportunity for improved performance within our portfolio companies to be leveraged on top by improvements at the parent company level. And I've said it a few times, but I'll say it again. I joined Jardines five years ago because I thought it was an exciting time at Jardines. It has indeed been an exciting time at Jardines where there has been a lot of change delivered and actually even more excited about the coming five years. So I think that there's lots of opportunities both organically and inorganically for us to drive improved performance and growth. For Astra, is there anything that Jardine Matheson may do to further enhance shareholder value, raise dividend payout ratio, asset disposals?
Look, I've mentioned that the Astra team, led by their own board, but with strong support from us as the largest shareholder and a very clear commitment to that position for the long term, have just started work on their portfolio review. It would be wrong at this stage for me to preempt any of that. Astra is a large organization. Indonesia is an environment that has a very complex set of stakeholders to understand and to work with. And frankly, there's a little bit more geopolitical uncertainty in the environment in Indonesia at the moment. And so that portfolio review will take into account all of those factors, and it would be really wrong of me to start saying we're going to go in one direction or another. Not because those aren't important questions.
They are important questions, but you know, we need to take the time to do the work properly before we start jumping to conclusions. And I don't want to mislead anybody. There are plenty of things that are on the table for discussion. We will get to those, and the Astra team will share them, and we will share our take on them in the new year once Lincoln has started with us. So thanks for that question, John. Last one from you. I think the market may not understand Jardine Pacific well as it's an unlisted arm. Can you explain the business outlook? Is there any room to unlock value for Jardine Pacific? So look, you saw that the first half results saw a good bounce back by JP, but fundamentally, JP is a business that is principally and primarily exposed to the business environment in Hong Kong.
Our new leader in Jardine Pacific, Elton Chan, is working through the same playbook that we've used elsewhere where we've got new leaders in place. So he is looking through the portfolio of businesses. He's thinking about, with his team and indeed with us, the growth and value opportunities within that business and the complexity of the portfolio as well and whether all parts of the portfolio fully pull their weight. So look, he's working on that and at the same time driving operational improvement and delivery. We're not ready yet, I think, to say exactly where we're going on JP. And as you can imagine, we wouldn't talk about individual businesses within the portfolio in this context. But I think that the direction of travel is probably likely to go in the same direction that we've seen elsewhere.
Something of a focusing down, something of a focusing on core competence and capabilities, and something of a focus on where we see opportunity to build scalable growth and sustainable value. And I think that that will give both potential opportunities to unlock value and potential opportunities to drive improved organic growth opportunities. So thank you for the question on JP. I do cover it in a little bit of detail in these results, but I think you are right. It is a little bit out of the way. And that, of course, is part of our thinking as well as we go through the strategic review. Simon, Goldman Sachs, has sent me a few questions. The first is Astra was arguably one of the weaker performing businesses in the first half. Have you seen any signs of bottoming out? What do you want to achieve from your strategic review?
I'll put the strategic review question aside because I think I've already dealt with that, Simon. In terms of bottoming out, look, we've seen good performance from the financial services business. We've seen good growth from the infrastructure business. Infrastructure is a little bit smaller, but there have been significant investments made in there, and there is good secular growth ahead. And of course, we've just made new investment in the industrial and logistics infrastructure of Indonesia, which I think has the opportunity to drive further growth moving ahead. The key challenges for Astra are in two places. One is in the four-wheeler auto market, and the second is in the coal market. Coal did see a little bit weaker prices in the first half of the year. But let's remember, we've come down the vast majority of the helter-skelter on coal prices.
Two years ago, they were at $350, getting on for $400 a ton, and through last year, we came down to the $130 level. Okay, they've come down to about $110 a ton this year, but they are still pretty stable at that level, and so I think that the majority of that reduction has already happened. Of course, that depends on the global economy, and everybody will have their own view about commodity prices, but added to that, the first half in Indonesia, it's always crazy to be talking about weather, but there's been an awful lot of rain, and that does impact a lot of the mining activities. We actually saw a much better month in June, and so who knows exactly what we will see in the second half of the year.
The other part, of course, within United Tractors is that we've seen a growing contribution from the gold mine, and that I think will continue to build through the rest of the year, and despite a moderation of nickel prices, again, in the first half of the year, we took the catch-up on the impairment that had been taken in Nickel Industries in the Q4 of last year. We still see good prospects ahead for nickel and good growth, so look, I think that there are pluses as well as minuses in HE, MC.
Ultimately, I think we have a very high-quality business there with very good quality people who are looking to continue to deploy new capital to build longer-term sustainable growth drivers, as well as continuing to perform the important work that they do supporting their coal mining contractors, which is critical, sorry, coal mining owners as the contractor to those businesses, which is critical to Indonesia's power needs for, I think, some time to come. On the auto side, again, the two-wheeler business performing very strongly, very solidly there. The main, I think, question that's been there for some time is around four-wheel. Look, I think we're still at the start of the journey in terms of the market development around four-wheel. I've said a number of times that I think that the Astra team have a very, very strong position there.
They are building new businesses in the used car segment, as well as continuing to work aggressively with their OEM partner, Toyota, and partners, Toyota and Daihatsu. They have great products that suit the marketplace, and for the large majority of Indonesia, we still continue to believe that it will be hybrid electric vehicles, where Toyota in particular has a very strong portfolio of products that will be the key market for Indonesia. In Jakarta, early adopters may well go full BEV, and it's very clearly on policy that BEV is favored as the future. We recognize all of that. The four-wheel team has pretty much maintained market share in the first half of the year. All our scenarios looking forwards assume that there will be market share goes to some of our competitors. We take them very seriously.
Ultimately, how that plays out in terms of the impact on Astra's four-wheel auto earnings depends probably critically at this point on the size of the market, and as I highlighted, we're in a pretty soft moment for the market at the moment, and so there are sort of signals there that we need to continue to be cautious, but we still have a highly profitable business that has seen its earnings grow significantly over the last five, 10 and 20 years and a strong team that I think, frankly, one of the jobs that they need to do is share their enthusiasm as part of the portfolio review that they have for their capabilities when we get to the first half of next year.
So I'm not yet saying that I'm expecting strong growth at Astra in the short term, but I do think we've got a highly capable team. And I couldn't possibly give investment advice, but we, through last year, continued to see good value that led to us building our stake in JC&C. A question from Simon on, oh no, that's the same question on JP, so I'm going to skip that one if you forgive me, Simon. Question from George. Pre-leasing progress at One Causeway Bay. Have they started any conversations at Mandarin on potentially selling the property after completion? Look, George, good question. Very timely and topical. The reality is there's a lot going on there. And so I think the right place to refer for updates is the Mandarin release itself.
I think at this point, they are obviously in discussion with a number of interested parties, and therefore, it wouldn't be appropriate for me to give detailed comments, but they are making good progress. We have said for a long time that ultimately, One Causeway Bay is not a long-term hold for us as an asset. There's no fire sale going to happen there. The reason we're leasing it up is because we think that a fully leased performing asset will be highly attractive in that location on the waterfront on Hong Kong Island. And so that remains the case, but we're under no pressure. Our balance sheet management means that we have no need to move forwards and do that at a price that doesn't deliver good value to the Mandarin shareholders, of whom we, of course, are the largest.
That may take a little bit of time in terms of how the leasing goes up. The wider Hong Kong office market beyond Central is still quite soft. I think that the optimism that is coming into the market is very encouraging, but it is going to take a bit of time for the wider Hong Kong property market to get fully back to strength. And so the Mandarin team will continue to deal with that, continue to remain open to serious and sensible discussions, but in the meantime, get on with the business, the important business of letting. George, you're really going for the jugular with the next one. Does Zhongsheng remain a core holding? I've been very clear here. You get full points for directness. Obviously, I can't say anything other than Zhongsheng does remain a core holding within our portfolio.
You wouldn't expect me to say anything other than that. We have to watch closely their first half results. We've been waiting for their results to stabilize in the new car market. So some of their good work in building their used car business, in broadening their financial services business, and also broadening their crash repair business, as well as the benefits of their new collaboration with AITO, can start to come through and stop being swamped by a huge downturn that's coming on weakening new car margins and sales. I don't know whether that'll come in the first half or not. We've seen that as a matter of policy from Beijing, the government is starting to make it clear that they don't wish to see things getting worse. So I suspect we are nearer the end of that new car down cycle than the beginning of it.
But having been burned over the last two to three years with Zhongsheng being probably the largest headwind in our results, I will watch that as ardently as anyone else. We continue to believe that the entrepreneurs at Zhongsheng are very well placed. They are heavily invested. They have the largest dealership network in the mainland to be winners among what is a pretty Darwinian space at the moment. So no change in our position at this point on Zhongsheng, George. A question from Praveen at Morgan Stanley. A simple one on dividend. I've already explained dividend as number two in the list of the capital allocation decision framework, but would you ever commit to mid-single-digit growth in dividend irrespective of earnings volatility?
Great question, Praveen, but I think you would imagine that I would be a very reckless CFO indeed to start making commitments like that ahead of a new CEO starting shortly. So look, interesting question, but you won't draw me on that one. And your follow-ups around what conditions would I need to do this? I'll put one in place. I'd need to talk to my new boss. So if you'll forgive me, I'm going to wriggle off the hook on that one for a little while. Timelines for the strategic reviews, I think I've been reasonably clear. We have good clarity, I think, in Mandarin, in Hongk ong Land, and in Dairy Farm. Still plenty of work to do on the execution of those, but I think we have very clear strategic framework for those businesses. JP, JC&C, Astra, work underway.
Expect to hear from us in the new year through Lincoln, supported by me. Very last question, I think, because we are running short on time, and we have got quite a few meetings with shareholders in Singapore to get to. Thank you very much for the good range of questions, but I'll take a final one from Carl at JPM. What's the target net gearing level? What's the maximum net gearing level that JM can accept? Look, one of the values that is likely to be a continuity point is our preference to be a prudently run balance sheet as we go forwards. But as we've seen when we privatized Jardine Strategic, we went at Jardines group level. That's a group consolidated number out into the mid-teens.
We can extremely comfortably do that, but you should assume that our largest shareholder continues to have values that prefers us not to be in that place. We have every flexibility, and of course, with a new CEO, they're clearly going to back him to temporarily go up into that territory, and who knows, even possibly beyond. But the reality is we will want to come back to a prudently balanced position on debt relatively quickly. We have great assets on our balance sheet and in our businesses to be able to achieve that. So with that, I'm going to conclude the interim results webcast and thank you everyone for joining us today. Goodbye.