Khazanah portfolio hits new high in 2013, net worth up 19.1% to RM103.5bil

KUALA LUMPUR: Khazanah Nasional Bhd’s portfolio rose to a new record last year, as it reaped the benefits of ongoing transformation in its key investee companies.

The state investment agency saw the net worth of its portfolio rise 19.1% to RM103.5bil as at Dec 31, 2013, from RM86.9bil a year earlier. This represents a three-fold increase from RM33.3bil in May 2004, when Khazanah embarked on its transformation journey, or a compounded annual growth rate (CAGR) of 12.5% per year since 2004.

“I think (CAGR) 12.5% per annum is appropriate … it is not too high, not too low,” Khazanah managing director Tan Sri Azman Mokhtar told reporters at the unveiling of the group’s 10th annual review yesterday.

Khazanah’s net worth growth of 19.1% in 2013 compared favourably against the broader market. It outperformed the local benchmark FTSE Bursa Malaysia KL Composite Index, which registered total returns of 14.4%.

Azman said he expected the capital markets, economies and societal and political trends to remain cautious and uncertain this year.

“Since 2008, the general outlook has been uncertain, but it is okay. Our investment stance has always been cautious, where there is a premium on remaining alert and nimble,” he said, adding that the group would also remain disciplined in its investment strategy.

“We are starting 2014 from a position of relative strength, with a strong buffer,” Azman said, adding that ongoing work on strengthening Khazanah as an institution would continue into 2014.

Khazanah’s realisable asset value as at Dec 31, 2013 grew to RM134.9bil from RM121.5bil in the previous corresponding period. Total shareholders’ funds stood at RM28.3bil against RM27bil as at Dec 31, 2012.

Its growth in portfolio value resulted in a strong asset cover (assets over liabilities) of more than 3.7 times.

Khazanah’s revenue last year totalled RM7.6bil, comprising a dividend income of RM6.6bil, with divestment gains and other income making up more than RM1bil. It also recorded an unaudited profit before tax of RM3.1bil, resulting in a proposed dividend of RM650mil.

Meanwhile, Azman said 2015, which marks the 10th anniversary of government-linked companies’ (GLCs) transformation, would be a year of graduation for GLCs.

“All the ‘K-7’ companies will have to ‘graduate’ next year (regardless of their financial performance),” Azman said.

The K-7 companies refer to the seven Khazanah companies in the group’s “G20” index of key GLCs under the GLC Transformation Programme or GTP. They are Telekom Malaysia Bhd, Axiata Group Bhd, Tenaga Nasional Bhd, CIMB Group Holdings Bhd, UEM Group Bhd, Malaysia Airports Holdings Bhd and Malaysia Airlines (MAS).

On its investment plans, Azman said Khazanah remained interested in expanding its presence in the insurance sector in Asia.

Khazanah’s insurance holding company, Avicennia Capital Sdn Bhd, completed the acquisition of a 90% stake in Istanbul-based Acibadem Saglik ve Hayat Sigorta AS for US$252mil (RM810mil) in November, complementing its acquisition of Sun Life Malaysia Assurance Bhd and Sun Life Malaysia Takaful Bhd (formerly known as CIMB Aviva Assurance Bhd and CIMB Aviva Takaful Bhd, respectively) in April 2013.

Meanwhile, an initial public offering remains on the cards for Khazanah’s Themed Attractions and Resorts Bhd, but Azman did not elaborate.

He said: “We are in no hurry to list any company … we need to achieve ‘critical mass’ first before we list any company.”

Separately, Azman said MAS, in which Khazanah remains a major shareholder, should focus on productivity and yield in order to return to the black.

“If it can fix these, then the picture can change very quickly,” he said.