Tabung Haji switches to dividend stocks

The pilgrimage fund buys new shares in top dividend payers like PetDag, PetGas and MBM Resources

by ALIFAH ZAINUDDIN / pic by RAZAK GHAZALI

LEMBAGA Tabung Haji (TH) continues to rejig its portfolio this year by buying more high-yield dividend stocks and selling large portions of its non-performing equities, a sign the fund is seeking stable returns.

The pilgrimage fund bought new shares in top dividend payers like Petronas Dagangan Bhd (PetDag), Petronas Gas Bhd (PetGas) and MBM Resources Bhd, according to Bloomberg data.

All three companies paid dividends of 85 sen, 82 sen and 22 sen a piece respectively last year.

TH has also invested in healthcare giant Duopharma Biotech Bhd and glove manufacturer Kossan Rubber Industries Bhd, which are currently making headlines due to the Covid-19 pandemic.

Duopharma shares are currently up 142% year-to-date to RM3.43 (from RM1.42) as the pharmaceutical company is expected to take part in the fill-and-finish process of potential Covid-19 vaccine for Malaysia. It currently boasts a dividend yield of 1.6%.

Kossan Rubber shares have surged 252.9% this year to RM14.68 (from RM4.16), and analysts see further upside potential ahead.

TH also bought minor stakes in MyEG Services Bhd, Press Metal Aluminium Holdings Bhd, Serba Dinamik Holdings Bhd and Pos Malaysia Bhd, all likely to announce dividend payouts despite the wild swings in the equity market.

TH has ceased to be a shareholder in companies like Pharmaniaga Bhd, Maxis Bhd, Sapura Energy Bhd and UMW Holdings Bhd with such stakes mainly sold to Urusharta Jamaah Sdn Bhd (UJSB), a special-purpose vehicle (SPV) under the Ministry of Finance.

In 2018, TH transferred RM19.9 billion worth of assets, including 106 non-performing stocks, to UJSB to rehabilitate the assets. The equities were sold at an average premium of 55% over their market value.

The new strategy meant that TH currently has total equity assets of about RM6.6 billion under management invested in 48 securities compared to RM13.3 billion worth of equity assets held in 107 securities at the end of last year.

By industry sector, Bloomberg stated that its largest current exposures are in the financials and industrials at 49.4% and 8.8% respectively.

By market cap, its largest current exposures are in small-cap and mid-cap stocks at 67.7% and 14.8% each.

The state-owned fund last year announced a dividend of 3.05% on the back of stronger finances following the UJSB deal. It declared a low dividend of 1.25% in 2018 amid ongoing efforts to restore its battered balance sheet.

UJSB has also been actively managing its portfolio and trimming its stakes in some companies during the Movement Control Order period.

The SPV now has stakes in 60 listed companies compared to 106 in late 2018. Its total current equity assets under management to date are worth about RM3.71 billion.