Companies likely to see changes in shareholding

Pic taken from MAHB Facebook

THE reduction of its stake in healthcare services provider, IHH Healthcare Bhd, is just the beginning of Khazanah Nasional Bhd’s divestment initiative under the new management.

According to sources, there are at least eight more companies, including six locally-listed ones, that are on the list of the sovereign wealth fund’s plans to pare down its stake.

Among the listed ones are Astro Malaysia Holdings Bhd, CIMB Group Holdings Bhd, UEM Sunrise Bhd, UEM Edgenta Bhd, Axiata Group Bhd, and TIME Dotcom Bhd (TDC).

As for the non-listed companies, the companies that will likely see Khazanah selling its stakes are Cement Industries of Malaysia Bhd and UEM Builders Bhd.

The fund’s move in reducing its stakes in these companies will eventually result in them being removed from the list of its “core companies”, and be placed under a trading portfolio.

Sources reveal to StarBizWeek that under a restructured Khazanah, only nationally-strategic corporations will remain as the fund’s strategic companies.

Among the listed ones, these will be airport management company Malaysia Airports Holdings Bhd, telecommunications company Telekom Malaysia Bhd and utility giant Tenaga Nasional Bhd. As for the non-listed entities, they will include highway operator PLUS Malaysia Bhd, Malaysia Airlines Bhd and wafer-fab manufacturer SilTerra Malaysia Sdn Bhd.

Below are companies (after IHH) that will likely see Khazanah reducing its stake to the level that they become a portfolio investment instead of a strategic investment:

Astro

Khazanah owns 1.08 billion shares, or a 20.7% stake, in the pay-TV operator founded by tycoon T Ananda Krishnan. The fund, through its privately-held company Pantai Cahaya Bulan Ventures Sdn Bhd, has been Astro’s biggest shareholder since the firm was relisted in October 2012 at an initial public offering price of RM3 apiece.

The current market value of Khazanah’s investment in Astro stands at RM1.26bil based on the company’s closing share price of RM1.17 on Thursday.

Amid weak earnings and a challenging outlook for its business, Astro’s shares have fallen by about 53% year-to-date, resulting in a total market capitalisation loss of RM7.7bil since the beginning of the year.

For Khazanah, this means a decline of RM1.6bil in its investment value in Astro since the start of 2018.

Astro’s net profit fell 94% to RM16.58mil for the second quarter ended July 31 compared with the RM246.3mil made a year ago, while its revenue was relatively stable at RM1.42bil during the quarter in review.

CIMB

Khazanah is the largest shareholder in the country’s second-largest banking group, with a stake of 27.5%, or 2.63 billion shares in the lender.

The current market value of Khazanah’s stake in CIMB stands at RM15.4bil based on the latter’s closing share price of RM5.85 on Thursday.

Year-to-date, CIMB’s shares have fallen by about 10.8%, essentially wiping out RM6.6bil in market cap. For Khazanah, this represents a decline of RM1.8bil in its investment value in CIMB since the start of 2018. However, the value in CIMB is its presence in Indonesia.

Amid the ongoing management shake-up in government-linked companies since Pakatan Harapan took over the government in May, CIMB saw Datuk Seri Nazir Razak – who is the brother of ousted premier Datuk Seri Najib Tun Razak – stepping down as the group’s chairman in September after 29 years at the bank.

CIMB posted a net profit of RM4.47bil for the nine months ended September 2018, up from RM3.41bil in the previous corresponding period, while revenue increased to RM13.31bil from RM13.11bil a year earlier.

Axiata

Khazanah owns 3.37 billion shares, or a 37.2% stake, in Axiata. This makes the fund the biggest shareholder in the regional telecommunications services provider.

Khazanah’s investment in Axiata currently carries a market value of RM12.7bil based on the company’s closing share price of RM3.78 on Thursday.

Axiata’s shares have been on a declining trend in the past six months due to its poor earnings and an increasingly challenging industry outlook locally as well as regionally.

Year-to-date, the company has seen its share price sliding about 32%, or a total market cap loss of RM15.6bil. This pulls down Khazanah’s investment value in Axiata by RM5.8bil year-to-date.

For the nine months ended September 2018, Axiata accumulated a net loss of RM3.4bil, compared with a net profit of RM884.8mil a year ago, while its revenue fell to RM17.6bil from RM18.1bil previously.

TDC

Khazanah has a direct interestof 11.2%, or 65.3 million shares, in TDC.

The fund, through its privately-held company Pulau Kapas Ventures Sdn Bhd, also owns a 30.4% stake, or 177.2 million shares, in the telecommunications services provider.

Based on its holdings in TDC, Khazanah’s current investment value in the company stands at about RM1.9bil. This compares with about RM2.2bil in the beginning of the year.

Year-to-date, TDC’s shares have fallen by about 10%, resulting in a market cap loss of RM448.8mil.

TDC is currently expanding its data centre market presence in the region. Overall, the group reckons that the operating environment will remain challenging in the domestic market, as players adjust their pricing to remain competitive.

Despite the challenges, TDC’s net profit grew 77% to RM207.9mil for the nine months to September compared with RM117.2mil in the corresponding period last year, while revenue rose to RM720.6mil from RM626.7mil, thanks to higher recurring sales recorded from the data and data centre businesses.

UEM Sunrise

Khazanah owns a 66.1% stake, or about three billion shares, in the property development and management company.

The market value of the fund’s investment in UEM Sunrise stands at about RM2.2bil. This is based on the latter’s closing share price of 72.5 sen on Thursday.

Year-to-date, UEM Sunrise’s shares have fallen by about 31% in value, wiping out RM1.4bil in market cap. For Khazanah, that would be a decline of RM944.2mil in its investment value in UEM Sunrise since the start of 2018.

The company saw its net profit increasing to RM260.25mil for the nine months to September 2018 from RM156.46mil in the previous corresponding period, while revenue dropped to RM1.29bil from RM1.56bil a year earlier.

UEM Sunrise is the master developer of Iskandar Puteri, one of the five flagship zones of Iskandar Malaysia in Johor. The group also has residential, commercial and mixed-use developments in the Klang Valley. Internationally, the group has projects in Vancouver in Canada, Melbourne in Australia, Durban in South Africa and Singapore.

UEM Edgenta

Through its wholly owned subsidiary UEM Group Bhd, Khazanah owns about 69.1%, or 575 million shares, in the asset management and infrastructure solutions company.

The market value of Khazanah’s stake in UEM Edgenta stands at RM1.5bil based on the latter’s closing share price of RM2.60 on Thursday.

UEM Edgenta is the only listed core company of Khazanah that has seen growth in its share price.

Year-to-date, the company’s share price has increased about 8%, resulting in a market cap growth of RM228mil. This means Khazanah’s investment value in the company has increased by about RM157mil since the start of 2018.

For the nine months to September, UEM Edgenta’s net profit fell 14% to RM80.5mil from RM93.4mil a year ago, while revenue rose 6% to RM1.5bil from RM1.4bil previously.