Khazanah’s net worth rises 63.5% to RM54.1bil

Better economic climate boosts investment value by 63.5%

KUALA LUMPUR: Khazanah Nasional Bhd has reaped the benefits of improved financial and economic conditions.

The Government’s investment arm saw the net worth of its portfolio rise by 63.5%, or RM21bil, to RM54.1bil as at Dec 31, 2009 from RM33.1bil a year ago.

The realisable asset value (RAV) of its investments also improved to RM92.2bil as at Dec 31, 2009 from RM68.9bil in 2008.

Total shareholder return on Khazanah’s portfolio of listed companies in 2009 stood at 43.9%, after falling 35.7% in 2008.

The rise was broadly in line with the FTSE Bursa Malaysia KL Composite Index’s total return of 49.3% over the same period.

“It was a good year for us,” managing director Tan Sri Azman Mokthar said at Khazanah’s annual review briefing here yesterday.

“However, we are still fairly cautious this year (on asset value appreciation). We see that it is still a broadly fragile (economic) recovery but conditions are certainly better than a year ago.

“Building on the recovery base in 2009 and barring a market relapse, we expect a gradual transition from a crisis management mode last year back into a normalised ongoing transformation mode in 2010,” he said.

Azman said Khazanah would this year focus on three broad areas – strengthening of its portfolio, catalysing on domestic economic growth and continuing to build for the future which included ongoing execution of the various programmes in capacity building.

He said it would seek both local and foreign parties to boost domestic investment activities.

Azman said Khazanah could raise up to RM3.5bil from the divestment of stakes this year. However, it was “not in a hurry” to divest as its financial position was “quite secure”, he said. “We won’t sell in a weak market,” Azman said.

Khazanah’s RAV over liabilities cover stood at 2.4 times as at Dec 31, 2009 compared with 1.9 times in 2008. The ratio is an indication of the strength of its balance sheet.

The investment agency raised RM3.1bil last year from selling its stakes in companies that included Tenaga Nasional Bhd, Malaysia Airports Holdings Bhd and PLUS Expressways Bhd.

Estimated gains on divestments last year totalled RM1.2bil.

On investments, Azman reiterated that Khazanah and its companies would spend RM58bil from 2009 to 2011 to develop the power sector, among others. It spent about RM36bil from 2004 to 2008.

Azman said the investment agency would also seek to invest the RM10bil allocated to it under the Government’s second stimulus package over the next three years.

On the 10-year government-linked company business transformation plan driven by Khazanah which started in 2005, Azman said there remained challenges.

“For example, some of the companies are ‘breaking through’. Some like CIMB (Group Holdings Bhd) have done very well, some like Malaysia Airlines has a very good turnaround but its industry is so difficult, while those like Proton Holdings Bhd require bigger strategic solutions,” he said.

He said the overall programme performance remained strong, based on financial performance as well as benefits generated for a broad range of stakeholders.

“If we did not do the bulk of heavy restructuring in 2005 and 2006, some of the companies might not have survived. The crisis has made them even stronger,” he said.

On his contract which expires in June, Azman said Khazanah would make an announcement “when the time comes”.

“When our management team came in (in 2004), we had not only the 10-year transformation plan but also Khazanah’s revamp. This will require two to three terms. Whether extended or not, it is not my say.”

Azman was appointed Khazanah chief in 2004. Come June, he would have completed two terms at the investment agency.