KUALA LUMPUR: Khazanah Nasional Bhd is keeping a cautiously resilient outlook for 2024, stressing that the global macroeconomic and market environment is expected to remain, on top of a significant global election cycle this year involving 76 countries.
Managing director for the national sovereign wealth fund Datuk Amirul Feisal Wan Zahir said nations that will see or have undergone elections recently represent over 60% of the world’s gross domestic product (GDP), which in themselves will likely introduce further macro uncertainties, coupled with the already much-mentioned ongoing geopolitical conflicts.
Announcing its overall performance for 2023 yesterday, Khazanah revealed that its net profit surged to RM5.9bil, more than two and half times the RM1.6bil it registered for the year before, attributed to higher dividends and distributions from investee companies, fair value gains and capital preservation.
While debt had increased marginally to RM50.2bil in 2023 from RM49.1bil in the previous year, equivalent to a realisable asset value (RAV) over debt (RAV cover) ratio of 2.7 times, the wealth fund reiterated its goal of attaining an RAV cover of three times to four times.
Summarily, the RAV of an asset is the effective value for which an asset can be sold, minus the estimated costs of selling or discarding the asset.
Datuk Amirul Feisal Wan Zahir
While still prudent, Amirul Feisal said 2023 was a recovery year of sorts for Khazanah after a difficult five-year period – in reference to the lockdowns in 2020 and 2021, tightened financial conditions in 2022, and China’s policy uncertainty as well as sluggish recovery over the last two years – as its net asset value also rose 4.3% year-on-year to RM84.8bil.
He added that Khazanah’s investment portfolio achieved a one-year time-weighted rate of return of 5.7% in 2023 compared to a 5.7% decline in 2022, and a five-year rolling return of 2.9%, with the improved returns in 2023 driven by the developed market portfolio and a partial recovery of its listed investee companies in Malaysia.
In terms of asset class, he noted that more than half of Khazanah’s investments were in Malaysian public markets while global markets made up 17.2% of its portfolio, followed by global private markets at 14.7%, real assets at 9.4%, and Malaysian private markets at 5.8%.
Commenting on Khazanah’s divestment and diversification plans, Amirul Feisal emphasised that the fund’s aim is to build a resilient portfolio while making sure that all of the assets are giving the best returns to the portfolio.
“The strategy that we have here is really not to divesify from the public markets in Malaysia but to basically be active in creating value in that portfolio. So it is about value creation for the Malaysian portfolio and looking for further opportunities to do so,” he said.
In 2023, Khazanah channelled RM7.3bil into new investments and raised RM7.2bil from asset monetisation, while as at Dec 31, 2023, its investment portfolio RAV stood at RM135bil, compared with RM130.4bil at end-2022.
Concurrently, Khazanah said its airline and tourism assets showed improved financial and operational performance, as Malaysia Aviation Group Bhd (MAGB) recorded a net income after tax for the first time in a full year since 2010, as its destination resorts and hotels segment also made a strong post-lockdown recovery.
This was driven by strong demand following the bounce back in international and domestic travel, passenger capacity returning to pre-lockdown levels, effective cost management and cash flow optimisation.
Despite the positive comment on the airline and tourism sectors, Amirul Feisal acknowledged that the sovereign fund, which remains sole shareholder of Malaysia Airlines Bhd (MAB), is open to all methods to achieve its strategy for the growth of the national carrier, including strengthening the airline’s long-haul routes.
Remarking that the national airline would do better to improve its resilience, he said: “The focus now is on building products that everyone can be proud of, and product development includes people, engineering and operations. That is still ongoing.
“For access, we know the aircraft is old but the replacement order is taking time due to global supply chain issues.”
He said MAB has the opportunity to strengthen some long-distance routes, but many things need to be done.
Moving forward, Amirul Feisal said Khazanah will stick to its Advancing Malaysia strategy, based on the four key areas of connectivity, energy transition, digitalisation and discovering catalytic or new growth areas for the country.
“These initiatives are formulated to preserve and enhance Malaysia’s cross-border and domestic integration, to keep pace with the speed of digital adoption and global technological advancements and to improve Malaysia’s economic competitiveness and national resilience,” he pointed out.
Khazanah declared a dividend of RM1bil for 2023 to the government, doubled from RM500mil in the preceding year.
