Khazanah assets at all-time high
Value of investments hits RM115.6bil on surging stock prices
KUALA LUMPUR: After two years of decline, the value of investments held by Khazanah Nasional Bhd hit an all-time high of RM115.6bil in 2017, boosted by surging stock prices at home and its investments in technology companies and stocks in China.
The Government’s strategic investment fund saw its portfolio net worth adjusted (NWA) rising RM13.4bil, or 13.2%, to RM115.6bil compared with the previous year’s RM102.1bil.
Realisable asset value increased by RM11.9bil, or 8.2%, to RM157.2bil as at Dec 31, up from RM145.3bil as at end-2016, while pre-tax profit soared 84.7% to RM2.89bil.
The strategic investment fund, which of late has come under scrutiny for the drop in the value of its investments, has declared a RM1bil dividend payout to the Government for 2017.
The NWA, which is the value of its listed portfolio after stripping out its debt, would have been higher had Khazanah included the gains from its property development in Singapore.
Khazanah also took a RM4.4bil provision for the recovery plan of Malaysia Airlines Bhd (MAB).
Managing director Tan Sri Azman Mokhtar said its net worth of assets could have been higher had it not provided for its investment in MAB.
Khazanah’s gains from its Singapore property project through its 60%-owned M+S Pte Ltd was estimated at RM6bil, which has not been factored into its 2017 NWA. The project in Singapore has been completed, with a take-up rate of about 80%.
Khazanah came under criticism after the net worth of its assets had declined by almost RM9bil in 2015, and stood at RM102.1bil as at the end of 2016.
In the last three years, the local bourse has underperformed and only saw its first annual gain in 2017. The FBM KLCI was up 9.5% last year.
Azman attributed the gains to the performance of CIMB Group Holdings Bhd and Tenaga Nasional Bhd (TNB).
He also pointed out that Khazanah made a good return on its investment in Chinese e-commerce giant Alibaba and other stocks in China.
“We believe that our portfolio now is more resilient and would be able to go through any downturn.
“It is not just about the return but also the risk management and long-term growth prospect,” said Azman at Khazanah’s 2017 results briefing.
Fielding questions on various matters from succession planning to the performance of Khazanah’s investments, Azman said Khazanah was now ready for the second phase of the transformation of its investee companies and has in place a succession plan.
“One must not overstay or understay in any position. I have seen through five tenures and have put in a succession plan in place, which has been approved by the board,” he said.
Last month, Khazanah announced the appointments of Ahmad Zulqarnain Onn and Tengku Datuk Seri Azmil Zahruddin Raja Abdul Aziz as deputies to the managing director under a plan to groom internal candidates for the top job.
The appointments came as specu- lation was rife that a candidate outside the current Khazanah set-up was to replace Azman, whose term ends in the middle of next year.
In the 90-minute press conference, Azman touched on the views of Khazanah as a shareholder in its investee companies.
On the speculated merger between Telekom Malaysia Bhd (TM) and Axiata Group Bhd, he said the corporate exercise must result in better performance
“If it makes sense, then Khazanah will be open to it. Above all, it must evaluate, taking into consideration the market conditions and cultural differences,” he said.
On the recent TM and TNB collaboration, he said that the timing was ripe for less commercially viable fixed-broadband connection.
Khazanah, which has made good returns from its investment in the technology sector, reckoned that the valuation in the sector “appears stretched”.
“Last year, we invested less in technology companies compared to previous years, although we met a lot of good companies,” he said.
PETALING JAYA: Khazanah Nasional Bhd will launch a programme called Transformation 2.0 today to boost innovation in its investee companies.
“We have created different outlines in the programme as compared to the previous programme because we want to prepare government-linked companies for tougher circumstances ahead, different economic conditions and disruptive technology,” said deputy managing director Tengku Datuk Seri Azmil Zahruddin Raja Abdul Aziz during the 14th Khazanah Annual Review.
The theme of the new transformation programme is TIDE – trending, innovation, disruption and entrepreneurship – and it aims to increase value-creation initiatives to improve the resilience of Khazanah’s investee companies.
The new five-year programme is expected to result in higher returns compared with the returns from the previous programme.