Khazanah’s 2016 earnings up but asset value, dividend down

KUALA LUMPUR: Khazanah Nasional Bhd, whose earnings grew 32% in 2016, will continue to focus on long-term value creation and building a resilient investment portfolio, with a gradual shift to include innovation and technology companies, to ride out the economic headwinds.
“We must make sure our portfolio doesn’t take excessive risk. We must put in strong prudential standards,” managing director Tan Sri Azman Mokhtar told a press conference here last Friday in conjunction with the release of the Khazanah Nasional Annual Review.
He said the investment fund’s focus will remain on domestic catalysts, as well as overseas and technology investments.
Last year, Khazanah made 17 new investments worth RM6.9 billion, and 13 divestments which brought a gain of RM2.6 billion.
Khazanah reported a 32% rise in profit before tax to RM1.56 billion for 2016 compared with RM1.18 billion for 2015, amid volatile equity and currency markets.
Its portfolio realisable asset value, however, dropped 3.4% to RM145.1 billion from RM150.2 billion. Net worth adjusted declined 6.4% from RM108.9 billion to RM101.9 billion.
Khazanah declared a lower dividend of RM650 million for 2016 against RM1.05 billion in 2015.
On this, Azman said the dividend payment was decided following discussions with the government.
“It really depends. Sometimes we have developmental projects, but sometimes the government needs more money. If Khazanah is not doing more catalytic, overseas or technology investments, we can afford to be more passive and increase the dividend,” he explained.
Khazanah’s realisable asset value cover remained strong at 2.9 times, with total assets and liabilities standing at RM145 billion and RM49 billion, respectively.
Azman said RM1 billion more will be deployed into the local equity market through ValueCAP Sdn Bhd.
“But, at the same time, we have to go out and should not crowd out the local market too much,” he said, noting that historically investment funds allocation is at a local-to-abroad ratio of 60:40.
When value has been created, Azman said, Khazanah will consider divesting its stake in government-linked companies.
Despite a weaker ringgit, he noted that Khazanah does not necessarily divest overseas investments and bring back funds to the country.
Commenting on Themed Attractions Resorts & Hotels, Azman said Khazanah could be listing the company in the next three years.
“We’re open, it depends on the readiness of the company and the market. It may be premature in 2017.”
Azman added that Khazanah is still deliberating whether to retain or dispose of its shareholding in Garena, a Singapore-based online gaming portal and e-commerce provider that is expected to raise US$1 billion (RM4.46 billion) through its initial public offering.