Khazanah’s profit more than halved in 2020

The sovereign fund’s dividend income, however, rose to RM5.2b from RM3.8b

By AFIQ AZIZ / Pic by TMR FILE PIX

KHAZANAH Nasional Bhd’s operational profit fell over 60% in 2020 to RM2.9 billion from RM7.4 billion the year prior as divestment gains fell steeply as a result of the Covid-19 pandemic.

Khazanah MD Datuk Shahril Ridza Ridzuan (picture) said divestment gains declined to RM2.7 billion against RM9.9 billion recorded in 2019, while impairment charges rose to RM6 billion from RM4.9 billion, mainly due to its aviation and hospitality assets.

Despite the drop in profit, Khazanah declared a dividend of RM2 billion for 2020 to the government, he said at the Khazanah Annual Review 2021 event yesterday.

The sovereign fund’s dividend income rose to RM5.2 billion from RM3.8 billion, with its debt declining by 6% to RM43.1 billion from RM45.8 billion.

Shahril Ridza said Khazanah made RM10 billion worth of investments last year and added that the fund was in discussions with the government to invest in new sectors.

He said this could include building up new industries and new entrants, as well as having partnerships with private entities.

Under its restructured portfolio, which comprises commercial and strategic holdings, Khazanah saw the realisable asset value (RAV) of its commercial fund amounting to RM95.3 billion at the end of 2020.

Its strategic fund, which includes loss-making national carrier Malaysia Airlines Bhd (MAB), saw its portfolio RAV decline by 15% to RM27.9 billion.

“The commercial fund, which focuses on investing to preserve and grow the long-term value of assets, had made significant inroads into diversifying its asset mix, two years into the portfolio rebalancing exercise.

“In 2020, Khazanah made progress across various asset classes, with continued rebalancing of our private investment in public equities assets, further deployment of funds into public equities for developed markets and taking advantage of market volatility in emerging markets,” Shahril Ridza said.

The strategic fund’s portfolio value, on the other hand, was heavily impacted by the fall in market value of key listed assets and provisions made on impairments to aviation and hospitality assets.

“Despite these challenges, we were able to build on our efforts in recent years, allowing us to navigate amid the economic uncertainty.

“We identified good investment opportunities during the pandemic and ensuing market volatility,” Shahril Ridza said.

Going forward, Khazanah will continue to deploy investments in a prudent manner in line with its refreshed mandate while taking advantage of volatility to seek opportunities in global markets.

“Khazanah continues to diversify our global portfolio as we build sustainable value for Malaysia as part of our long-term mandate,” Shahril Ridza said, while remaining cautious on the outlook for the year ahead.

He said despite the commencement of the National Covid-19 Immunisation Programme, the vaccination programme in Malaysia, as well as in other countries, will take time.

“We will see more progress towards a return to recovery and normalisation as the world gets a better grip of the situation, and the impact of the various public health and economic measures gains further traction.

“In key sectors such as aviation and tourism, it is unlikely that a full recovery will happen before 2023,” he said.

Besides MAB, Khazanah’s investees include Malaysia Airports Holdings Bhd, and themed attractions resorts and hotels were also not spared from the Covid-19 impact.

The fund had to impair several assets including RM3.1 billion for Malaysia Aviation Group Bhd of the total RM6 billion impairment it made in 2020.