Tuesday, March 5th, 2019

 

Khazanah leaving talks on Putrajaya’s toll takeover to PLUS

KUALA LUMPUR, March 5 — Khazanah Nasional Bhd leaves it to PLUS Expressway Bhd to handle the discussions on the proposed acquisition of tolled expressways by the government. Khazanah managing director…


Minister proposes to cap area for oil palm plantations at 6.5 million hectares

KUALA LUMPUR: The Ministry of Primary Industries will be presenting a proposal to the Cabinet this month to cap the area for oil palm plantations at about 6.5 million ha, up from the 5.85 million ha as at end-2018.

Minister Teresa Kok (pix) said this was expected to be achieved by 2023 based on the average annual expansion of plantations from 2013 to 2018.

“This move was made in order to dismiss accusations that oil palm plantations are the reason for deforestation.

“But, in order to achieve this, we have to work with various state governments,” she said when officiating the 30th annual Palm and Lauric Oils Conference and Exhibition, Price Outlook 2019 Conference and Exhibition (POC 2019) today.

Kok said palm oil players should also improve the research and development of seedlings, as well as boosting the productivity and yields of existing oil palm trees.

Kok said the ministry would also propose to the Cabinet to compel information on the areas under oil palm plantations to be made public.

“We need to be transparent. We hope the cabinet will approve the proposal,” she said.

Meanwhile, Kok said the government’s effort this year to expand the B10 and B7 bio-diesel programmes to the transport and industrial sectors was expected to raise palm oil consumption by 761,000 tonnes annually.

“This will help reduce the huge stockpile and lift the commodity prices,” she added.


Khazanah Nasional targets return to profitability this year

KUALA LUMPUR: Khazanah Nasional Bhd, which posted a pre-tax loss of RM6.27 billion in 2018, expects to return to profitability in 2019, said managing director Datuk Shahril Ridza Ridzuan.

“Looking at 2019, we’re comfortable with the fact that we should be able to see profitability, given that a lot of clean-up that we’ve done for 2018 has gone through the books. We don’t anticipate any large impairments that we have to go through again in 2018 and that puts Khazanah’s balance sheet on a good standing,“ he told a media briefing at the Khazanah Annual Review here today.

Khazanah was in the red in 2018, compared to a pre-tax profit of RM2.90 billion a year earlier due to fewer divestments, reduced dividend income and higher impairments, during a period of transition for Khazanah in an unfavourable market.

Impairments stood at RM7.3 billion in 2018, RM5 billion higher than 2017’s RM2.3 billion. The fund declared a dividend of RM1.5 billion for 2018.

Khazanah last posted an annual pre-tax loss in 2005, while the last annual net loss was in 2008.

Shahril said its performance in 2018 was impacted by several key global and domestic developments in both the economic and social spheres. At the same time, the government initiated a reset of Khazanah, which involved significant changes, including a refreshed mandate.

Khazanah’s portfolio as measured by its net worth adjusted (NWA) declined to RM91 billion on Dec 31, 2018, a 21.6% drop from RM116 billion on Dec 31, 2017. Realisable asset value (RAV) skidded to RM136 billion from RM157 billion during the same period. However, the long-term portfolio performance remained on an upward trajectory, with NWA achieving an 11% return annually over the last 10 years.

Khazanah’s portfolio was affected by global economic uncertainty in 2018, which saw markets underperform due to geopolitical tensions and a pessimistic growth outlook for emerging markets.

In addition, the portfolio was impacted by domestic developments, including a subdued earnings outlook, market volatility and regulatory changes during the period under review.

Shahril said about half of the impairments was from Malaysia Airlines. But for Malaysia Airlines and all companies under Khazanah, he said the primary responsibility for working out a viable strategy should rest with the management and boards of those companies.

“We’re waiting for Malaysia Airlines’ management and board to complete their review of their strategy and revert to us shareholders for our input and for us to then discuss with the government on the level of support.”

Shahril also clarified that Khazanah is not in talks with any parties at present for the sale of Legoland Malaysia in Johor. Legoland Malaysia was a great success with positive earnings, he said, in response to reports that it was weighing the sale of the theme park.


German market puts brakes on high-frequency traders

FRANKFURT, March 5 — German stock market operator Deutsche Boerse plans to slow down some kinds of high-frequency trading by 1,000 times in a pilot project designed to reduce "aggressive" behaviour, it told AFP today. Trading in German and French…


UK car sales back on track after bumpy ride

LONDON, March 5 — New car sales in Britain rose in February from a year earlier, reversing five straight monthly declines despite fears over Brexit and China's economic slowdown, data showed today. New registrations for all cars increased 1.4 per…



Stocks stall, dollar stands tall as China trims growth targets

LONDON, March 5 — World shares stalled near a five-month high today as China cut its growth targets to a 30-year low but added more stimulus, and a revived dollar headed for a fifth day of gains in the currency markets. Brighter German and French…


Khazanah to focus on rebalancing portfolio, strengthening financial position this year

KUALA LUMPUR: Khazanah Nasional Bhd will focus on executing its portfolio rebalancing strategy and strengthening its financial position in 2019, as well as developing policies, guidelines and processes for a new dual-fund structure to support the refreshed mandate.

Managing director Datuk Shahril Ridza Ridzuan said the state-owned investment fund will pursue two investment objectives – commercial and strategic.

The commercial objective focuses on growing financial assets and diversifying revenue sources for the nation, while the strategic objective is to hold assets that bring long-term economic benefits.

The commercial fund is an inter-generational wealth fund with a targeted return equivalent to the Malaysian Consumer Price Index plus 3% on a five-year rolling basis. This fund includes public assets such as CIMB Group Holdings, Axiata Group, IHH Healthcare and Alibaba.com; and private assets such as The Holstein Milk Company, Sun Life Malaysia, WeLab and Palantir.

Khazanah plans to rebalance the commercial fund via a shift to long-term strategic asset allocation, diversifying portfolio to be more balanced across geographies and sectors as well as to improve risk diversification.

“In Malaysia at least, a big chunk of our assets are tied up with a few companies. Over time, that will have to be restructured to provide a more balanced portfolio spread over more sectors and more geographies to take out the concentration risks,” said Shahril.

He said more transactions, including divestments, are likely to happen in the commercial fund as it transitions.

“We should only be executing deals that makes sense for us, where we get the right value for those assets and the divestment proceeds can then be redeployed towards restructuring the portfolio and doing more investments.”

Shahril said Khazanah is primarily an equity investor and will always experience more volatility in terms of pricing and the movement of a share’s market value.

“It doesn’t change our investment philosophy, which is investing for the long term. Investing for the long term will require you to absorb short-term volatilities,‘ he added.

Meanwhile, the strategic fund is a developmental fund with a targeted return equivalent to the 10-year Malaysian Government Securities yield on a five-year rolling basis, as well as measurable economic benefits. This fund includes strategic assets such as Telekom Malaysia, Tenaga National, Malaysia Airlines, Malaysia Airports and PLUS Malaysia; and developmental assets such as Silterra, Iskandar Investment, Themed Attractions Resort & Hotels, Pinewood Iskandar Malaysia Studios and Medini Iskandar.

Khazanah plans to develop the strategic fund by generating enhanced shareholder return for strategic assets, achieving commercial sustainability for developmental assets and delivering economic impact and identifying new strategic investments with capacity to deliver economic benefit.

Overall, Khazanah will be guided by its investment philosophy of earning appropriate risk-adjusted financial returns, generating sustainable returns and integrating ethical and responsible considerations into investment activities.



Minister proposes higher cap on area for oil palm plantations

KUALA LUMPUR: The Ministry of Primary Industries will be presenting a proposal to the Cabinet this month to cap the area for oil palm plantations at about 6.5 million ha, up from the 5.85 million ha as at end-2018.

Minister Teresa Kok (pix) said this was expected to be achieved by 2023 based on the average annual expansion of plantations from 2013 to 2018.

“This move was made in order to dismiss accusations that oil palm plantations are the reason for deforestation.

“But, in order to achieve this, we have to work with various state governments,” she said when officiating the 30th annual Palm and Lauric Oils Conference and Exhibition, Price Outlook 2019 Conference and Exhibition (POC 2019) today.

Kok said palm oil players should also improve the research and development of seedlings, as well as boosting the productivity and yields of existing oil palm trees.

Kok said the ministry would also propose to the Cabinet to compel information on the areas under oil palm plantations to be made public.

“We need to be transparent. We hope the cabinet will approve the proposal,” she said.

Meanwhile, Kok said the government’s effort this year to expand the B10 and B7 bio-diesel programmes to the transport and industrial sectors was expected to raise palm oil consumption by 761,000 tonnes annually.

“This will help reduce the huge stockpile and lift the commodity prices,” she added.