Khazanah keeps options open on MAB listing strategy

Airline must break even first, says Khazanah MD


Khazanah Nasional Bhd will consider all strategic options to enhance value once Malaysia Airlines Bhd (MAB) breaks even in 2019.

Khazanah MD Tan Sri Azman Mokhtar told The Malaysian Reserve this could include a potential listing, a strategic tie-up with foreign carriers or even a stake sale.

“By 2019, our target is to list MAB or transform the company to be in position for listing.

“We will consider all options, but for that to take place, MAB must break even first, which we target latest by the first half of 2019 (1H19),” he said, on the sidelines of Khazanah’s 2018 Annual Review in Kuala Lumpur yesterday.

Khazanah, which now wholly owns the national flag carrier, had initially targeted MAB to break even by the end of 2017. The target, however, has been revised unofficially several times, with the latest being 1H19.

Former MAB CEO Peter Bellew, in his last week in office as the airline’s boss, had disclosed that MAB was open to the idea of foreign carrier buying a strategic stake in the national airline.

In the press briefing yesterday, Azman added that MAB is in the path of growth and profitability as per Khazanah’s 12-point turn-around plan.

If not for the weaker oil price and ringgit exchange rate, MAB would have been profitable by now, Azman said.

“Malaysia Airlines is currently in a very critical phase in the turnaround plan as the current recovery plan ends on Dec 31, 2019.

“More needs to be done, but one cannot deny the journey they had come through this far,” he said referring in part to the 14,000 employees of MAB.

Azman added that Khazanah has disbursed RM4.4 billion, or 70% of the RM6 billion or so, allocated for the troubled carrier’s reset plan.

He said the balance of the fund will be channelled when necessary and in a prudent manner.

Meanwhile, the value of investments held by the sovereign investment fund rose to a historic high of RM115.6 billion in 2017, boosted by surging stock prices on Bursa Malaysia and markets abroad.

Khazanah’s portfolio grew by a net worth adjusted value of RM13.4 billion, or 13.2% year-on-year (YoY), from RM102.1 billion in 2016.

The FTSE Bursa Malaysia KLCI was up 9.5% last year, which was the benchmark first annual gain since 2013.

“Good progress was made across all other aspects of our mandate — strategic, societal and institutional,” Azman said. Pretax profit for the year soared 84.7% YoY to RM2.89 billion, allowing Khazanah to declare a RM1 billion dividend payout to the government for 2017.

Realisable asset value (RAV) increased by RM11.9 billion, or 8.2% YoY, to RM157.2 billion as at Dec 31, 2017.

The RAV has risen by RM106.3 billion from RM50.9 billion in May 2004. Khazanah made a total of 14 discrete new investments totalling RM6.3 billion and 12 divestments in 2017, providing proceeds amounting to RM6.4 billion.

Gains from the disposals amounted to RM2.5 billion for the year.

Since 2004 to 2017, Khazanah has made a total of 175 investments worth RM87.9 billion and 102 divestments with proceeds amounting to RM59.2 billion. Overall gains on divestments stood at RM27.4 billion.

Khazanah’s investments in Malaysia represented a 55.5% of RAV as at end-2017, while overseas investments accounted for 44.5%. About three quarter of its investment are with Malaysian companies.