By P PREM KUMAR & MARK RAO / Pic By MUHD AMIN NAHARUL
PERMODALAN Nasional Bhd (PNB) will leverage on technologies within its corporate investments to provide better returns to shareholders, while gaining access to new markets.
PNB group chairman Tan Sri Abdul Wahid Omar (picture) said the state investment arm is looking at ways to utilise technology and innovation to improve revenue and manage costs in firms that it has invested in.
He said PNB’s strategic companies, including Malayan Banking Bhd (Maybank), Sime Darby Plantation Bhd and SP Setia Bhd, are now looking at adopting technologies for better returns and market access.
“It is our expectations that these entities will take advantage of technologies in their business strategy, with Maybank currently embarking on financial technology and Sime Darby Plantation using technology to improve yield,” Abdul Wahid said in a panel discussion at the Invest Malaysia 2018 conference in Kuala Lumpur yesterday.
He also said PNB would steer property companies under its stable to be mindful of this shift in behaviour when developing townships, as increased online sales are seen coming into the market compared to the dwindling retail sales.
Abdul Wahid said PNB would also capitalise on the upside from investing in emerging technologies and industries, especially in gaining access to new markets.
The fund is, however, mindful of the potential downside brought on by the intangibility of the technology space.
He said PNB will also consider bringing in talents and experts in the technology field to manage some of its investments in the sector.
PNB is also adopting an active shareholder approach for the companies it has an over RM1 billion stake in.
Abdul Wahid added that PNB is also looking at adjusting the structure of these companies to be leaner and solely focusing on their core business.
“In 2018, we would like to see these entities focusing on their respective business fundamentals and improving their earnings, which will result in higher total shareholders returns for us,” he said.
He said the corporate sector is expected to perform better this year by enhancing revenue, optimising cost, generating better earnings and better dividend pay-outs.
The better prospects will also directly benefit some 13.2 million unitholders of PNB unit trusts.
Abdul Wahid said 2017 was a good year for the local firms, in line with the FTSE Bursa Malaysia KLCI climbing 9% over the period, while companies under PNB’s portfolio saw their combined market capitalisation increasing by double of the equity market growth.
PNB is Malaysia’s largest fund manager with a fund size of about RM279 billion, 90% of which is invested in Malaysia, from which over 70% is invested in public equities.
Meanwhile, Maybank Kim Eng global investment strategist Sadiq Currimbhoy said opportunities for growth are abundant in the South-East Asian market.
He cited online sales as an example, where online sales in the Asean region only comprise 5% of global retail sales compared to China’s 15%.
“The opportunity is in Asean, but there are still barriers to trade and payments,” Sadiq said, adding that Malaysian companies are currently operating in lowmargin and return-on-equity (RoE) environment.
“I think if we manage to find a way to allow cross-border payments within Asean and are able to achieve that, we will open up an enormous amount of much easier marketplaces to enter into,” he said.
This, however, will require enormous regulatory reforms and political will from all involved parties.