KUALA LUMPUR: Permodalan Nasional Bhd (PNB) will continue to unlock value in its companies, encouraged by the RM20bil rise in market value of its six main listed entities.
In describing his plan of “building a distinctive world-class investment house”, PNB group chairman Tan Sri Abdul Wahid Omar (pic) said he wants to see PNB investee companies go back to their core activities.
He alluded to more restructuring taking place to create more “pure play” companies within the PNB stable.
“We would like our investee companies to focus on their core activities.
“For example, plantation companies focusing on improving their yields and extraction rates, as opposed to looking at other areas,” he told reporters at a briefing on PNB’s 2016 annual review yesterday.
Wahid reckons that the announced demerger plans for Sime Darby Bhd and UMW Holdings Bhd had excited the market. This, in turn, has contributed to a rise in the market value of its six main listed companies by RM20bil since the beginning of the year.
The said companies are Malayan Banking Bhd, whose market capitalisation has increased by 9.6% or RM8.1bil, and Sime Darby by 16% or RM8.8bil, while UMW has gained 34.4% or RM1.8bil, Chemical Company of Malaysia Bhd has soared 71.6%, SP Setia Bhd has jumped 11.5% and MNRB Holdings Bhd has seen its market value upped by 20.7%.
It should be noted that the local stock market has gained more than 6.3% since the beginning of the year, after three years of consecutive declines.
“The focus is on fundamentals. We want to grow our investee companies’ profits so that it reflects on their dividend payouts,” Wahid said.
Meanwhile, PNB president and group CEO Datuk Abdul Rahman Ahmad said the restructuring of PNB’s investee companies would unlikely involve divestment of stakes by the investment fund.
“There is no intention to reduce our stakes. We are very invested in the domestic public equity market.
“What we hope to achieve is enhance the value of our investee companies,” he said.
Abdul Rahman, who was made PNB CEO last October and who was previously the head honcho of national private equity firm Ekuiti Nasional Bhd, explained that value creation in companies could involve mergers and acquisitions or the spin-off of non-core assets. He added that some companies may need cost-cutting initiatives or to grow organically.
On PNB’s investment strategy, Abdul Rahman said that PNB was looking to increase its investment allocation to overseas assets, but would revisit the plan when the ringgit stabilises.
“Now is not the right time to invest abroad,” he said.
In 2016, PNB’s asset under management grew by 4.7% to RM266.51bil. The largest fund-management firm in the country paid a total of RM15.3bil in net income to its unitholders last year, which was 2.9% lower than a year earlier, dragged by the broader weakness in the local equity market performance.
A total of 98.2% of PNB’s investment is in Malaysia, while the remainder 1.8% is overseas. Some 69% of its asset allocation is in equities, 3% in private equity, 4% in fixed income and 3% in property. It has some 20% lying around in cash.
On the 2017 outlook, Wahid said PNB is bullish on its outlook for the stock market this year backed by global growth, stability in the ringgit and improvement in export activities.
“This is despite the expectations of rising US interest rates and continuing volatility in commodity prices,” he said.
According to PNB’s projections, Malaysia’s economic growth would likely pick up to 4.4% this year from 4.1% in 2016.
On the implementation of PNB’s six-year strategic plan, Wahid said it had already started early this year.
The plan, dubbed the “Strive-15 Strategic Plan 2017-2022”, was announced last year after both Wahid and Abdul Rahman took up PNB’s top management roles.
The plan aims to deliver sustainable and competitive returns for PNB’s unitholders.
“Since the announcement of the plan last November, our strategic companies such as Sime Darby and UMW have announced demerger exercises.
“We hope these would excite the market and support corporate growth in Malaysia,” Wahid said.
During the briefing, PNB announced an income distribution of more than RM1.5bil for five of its funds.
It has declared an income distribution of 6.0 sen per unit for Amanah Saham Malaysia (ASM) and 6.5 sen per unit for Amanah Saham Bumiputera 2 (ASB 2) for the financial year ending March 31, 2017.
The income distribution for ASM and ASB 2 involves a total payout of RM1bil and RM384.7mil, respectively.