Morgan Stanley has started Jardine Cycle & Carriage (C07.SG) at Overweight with $41.00 sum-of-parts target price, says Dow Jones.

Morgan Stanley says stock is best way to capitalise on strength of 50%-owned Astra International (ASII.JK), which accounts for 90% of group earnings, without paying for high valuations. Notes direct investors in Astra have to pay 15% dividend withholding tax, whereas Jardine pays concessionary 10% tax as it’s major shareholder.

“This dividend income is not subject to Singapore’s corporate tax. In addition, there are no Singapore withholding taxes for Jardine’s dividends, implying that investors can get a 5% higher dividend when they invest indirectly in Astra via Jardine,” says Morgan Stanley.

Research house adds implied market cap of Jardine’s non-Astra assets has fallen to record negative levels, giving investors free exposure to group’s non-Astra businesses. Shares +2% at $29.94.