Declines in PLC earnings must be addressed, says Wahid

KUALA LUMPUR: Bursa Malaysia Bhd chairman Tan Sri Abdul Wahid Omar has stressed the need to address the issue of declining earnings of Public Listed Companies (PLCs), which fell 5.4% between 2015 and 2019.

“Although Malaysia stands out as one of the economic success stories in Asia over the past few decades, there is pervasive conversation today that needs to be discussed.

“Will we use the unique period to advance faster, or will we go back to the status quo? Which brings us to the third subject on the importance of PLCs to continue to perform,” he said in his welcoming speech at Invest Malaysia 2020 yesterday.

Over the last five years, he said, the domestic market has been confronted with several challenges, stemming from escalating trade tensions, softer economic growth outlook and lacklustre corporate earnings.

“Given the rapid changes that have occurred, moving forward with the status quo now seems somewhat inconceivable. We need to relook and possibly replicate some of the past successes such as the GovernmentLinked Company (GLC) Transformation Program,” Abdul Wahid said, adding that between 2004 and 2015, many GLCs were transformed into companies with better performance, better governance and enhanced nation-building roles.

Over the 11-year period, he said, the net profit of 17 GLCs grew by 10.2% a year from RM9.9 billion to RM26.2 billion, while their combined market capitalisation expanded 2.9 times from RM133.8 billion to RM386 billion.

This represented a total shareholder return of 11.1% annually, while other non-GLCs similarly performed well over the same period as reflected in the improvement in the FBM KLCI from 907.43 to 1,692.51 or a Compound annual growth rate of 5.8% a year over the same period.

“The time has come for shareholders, including Government-Linked Investment Companies, to demand more from the board and management of the PLCs they invest in,” he added. – Bernama