KUALA LUMPUR: Khazanah Nasional Bhd’s net asset value (NAV) increased to RM86 billion in 2021 from RM79 billion in 2020, which recorded a compounded annual growth rate (CAGR) of 5.8 per cent since 2004.
However, operating earnings plummeted from RM2.9 billion in 2020 to RM670 million in 2021, partly due to continued financial assistance to Khazanah’s airlines and tourism firms hit by the Covid-19 outbreak.
Profit was also impacted by lower fair value gains and lower dividend income from investee companies on the back of subdued 2020 earnings.
Khazanah deployed RM8.7 billion in new investments in 2021, with a significant portion (41.7 per cent or RM3.6 billion)
invested in Malaysia and raised RM4.8 billion from the monetisation of assets in its portfolio.
The sovereign wealth fund said while 2021 saw the gradual reopening of the global economy, the year remained challenging with the Covid-19 restriction measures imposed, placing pressure on markets and economies across the globe.
Khazanah managing director Datuk Amirul Feisal Wan Zahir said despite a challenging backdrop of movement restrictions and reduced economic activity globally, Khazanah managed to create value, generate strong investment returns, and grow its NAV by RM7 billion.
“We also continued our rebalancing efforts towards having a more diversified portfolio and undertook measures to support our investee companies that were most impacted by Covid-19, namely in the aviation and tourism sectors,” he said in a statement today.
The sovereign wealth fund’s long-term strategies, Amirul Feisal said, reaffirm its commitment to advancing Malaysia’s economy and society through a new Dana Impak allocation, leveraging its global networks to facilitate knowledge and investment opportunities back to Malaysia, and creating societal value for Malaysians.
Khazanah’s operating expenses (OPEX) were reduced to RM420 million from RM490 million in 2020.
Debt increased marginally to RM48 billion from RM43 billion in the previous year, while its realisable asset value (RAV) over debt ratio remained healthy at 2.8 times.
Khazanah declared a dividend of RM2.0 billion to the government for 2021.
Further, Khazanah’s performance of its commercial fund is in line with long-term expectations, achieving a NAV time-weighted rate of return (TWRR) of 19.0 per cent in 2021, which equates to a three-year rolling return of 7.0 per cent.
The positive performance was mainly attributed to the recovery of the listed portfolio in Malaysia after three years of underperformance, successful monetisation of private equity (PE) investments in the US and Europe, and strong performance of its new, still-in-progress public equities developed market (DM) deployment programmes.
This has positioned Khazanah to be on track to meet its long-term five-year rolling target of the consumer price index (CPI) up by 3.0 per cent.
Khazanah’s portfolio rebalancing towards the target strategic asset allocation (SAA) saw further deployment into public equities – developed markets (DM), real assets (RA) and private equity (PE).
For its Malaysian assets, the focus continues to be on value-creation efforts to future-proof and drive performance improvements in their businesses.
Khazanah continued to support many of its assets in the strategic fund to weather the impact of the Covid-19 pandemic and protect shareholder value.
The strategic fund recorded a NAV TWRR of negative 11.4 per cent in 2021, affected by Khazanah’s investments that were sensitive to the pandemic, namely in the aviation and tourism sectors.
Despite the challenging conditions, Khazanah achieved numerous key milestones, including the early completion of Malaysia Aviation Group’s (MAGB) restructuring process, which resulted in an RM15 billion reduction in liabilities.
This restructuring effort enables MAGB to be more financially resilient and readies the airline operations for the anticipated recovery in air travel.
Khazanah maintained support for its developmental assets such as Themed Attractions Resorts & Hotels (TARH) and Iskandar Malaysia through capital injections in 2021 and is currently working with the management of those companies to develop and execute strategies for business recovery and sustainability.
“These last two years have been very challenging for us to navigate volatile markets and the social and economic impact of the pandemic.
“We truly believe that Khazanah’s refreshed strategy will allow us to achieve this, and to this end, we call upon our fellow Malaysians to join us on this journey towards Advancing Malaysia,” Amirul Feisal said.
Source: New Straits Times
