Profit was hit by pandemic lower FV gains and lower dividend income from investee firms on the back of subdued 2020 earnings 

by S BIRRUNTHA / Pic by MUHD AMIN NAHARUL

KHAZANAH Nasional Bhd’s profit from operations fell to RM670 million in 2021 from RM2.9 billion in 2020, mainly due to continual financial assistance extended to Khazanah’s airlines and tourism companies, which are still weathering headwinds from Covid-19 pandemic. 

The country’s sovereign wealth fund said the profit was also impacted by lower fair value (FV) gains and lower dividend income from investee companies on the back of subdued 2020 earnings. 

Its net asset value (NAV), however, grew to RM86 billion from RM79 billion and Khazanah has declared a dividend of RM2 billion to the Malaysian government for 2021. 

According to Khazanah MD Datuk Amirul Feisal Wan Zahir (picture), while 2021 saw the gradual reopening of the global economy, the year remained challenging with the Covid-19 restriction measures imposed, placing pressure on markets and economies across the globe. 

“Despite a challenging backdrop of movement restrictions and reduced economic activity globally, Khazanah managed to create value, generate strong investment returns and grow our NAV by RM7 billion. 

“We also continued our rebalancing efforts towards having a more diversified portfolio and undertook measures to support our investee companies that were most impacted by Covid-19 namely in the aviation and tourism sectors,” he said while presenting at the Khazanah Annual Review 2022 media briefing in Kuala Lumpur yesterday. 

Amirul Feisal also noted that Khazanah deployed RM8.7 billion in new investments in 2021, with a significant portion invested in Malaysia (41.7% or RM3.6 billion) and raised RM4.8 billion from monetisation of assets in its portfolio. 

He added that the fund continues to maintain its financial discipline, whereby its operating expenses were reduced to RM420 million from RM490 million in 2020. 

He also noted that debt increased marginally to RM48 billion from RM43 billion in the previous year, while its realisable asset value over debt ratio remained healthy at 2.8 times. 

Additionally, Amirul Feisal said Khazanah continued to support many of its assets in the strategic fund to weather the impact of the Covid19 pandemic and protect shareholder value. 

He added the strategic fund recorded a NAV time-weighted rate of return of negative 11.4% in 2021, affected by Khazanah’s investments that were sensitive to the pandemic, namely in the aviation and tourism sectors. 

Despite the challenging conditions, Amirul Feisal said Khazanah achieved several significant milestones including the timely completion of Malaysia Aviation Group Bhd (MAGB) restructuring exercise which saw the reduction of RM15 billion in liabilities. 

He said this restructuring effort enables MAGB to be more financially resilient and readies the airline operations for the anticipated recovery in air travel. 

He also highlighted that Khazanah maintained support for its developmental assets such as Themed Attractions Resorts and Hotels and Iskandar Malaysia through capital injections in 2021, and is currently working with the management of those companies to develop and execute strategies for business recovery and sustainability. 

Aside from producing financial returns, he said Khazanah also continued to deliver societal value and impact through its related entities and initiatives. 

He added that its foundation, Yayasan Hasanah, managed a total of RM554 million in 2021 which directly and indirectly assisted 1.5 million people through Covid-19 relief efforts and various other programmes. 

Looking ahead, he said Khazanah had set four strategic imperatives to deliver sustainable value for Malaysians, which are coined under the phrases “advancing Malaysia”, “building on our financial strength”, “creating a sustainable future” and “developing a winning team”. 

Meanwhile, Amirul Feisal announced that Khazanah will be consolidating its funds into a single diversified portfolio with a realisable asset value (RAV) of RM124.8 billion as part of its new “advancing Malaysia” strategy. 

According to him, the move to consolidate Khazanah’s previously segregated commercial and strategic funds is core to building financial strength of the sovereign wealth fund to deliver sustainable value for Malaysians. 

“Companies like Telekom Malaysia Bhd, Malaysia Airports Holdings Bhd and et cetera, we do demand commercial returns regardless. 

“The answer to the question of what is strategic or not strategic will depend on who you ask. It is easier for us to put everything into one and within that, there are different asset classes that you see depending on performance. 

“What we are working towards is a strategic asset allocation that tries to get maximised returns based on the risk appetite that we have,” he shared. 

He also added that despite the aggregation of funds, Khazanah will still need to work with the government to decide on the sale of any assets with national interest. 

Moving forward, Khazanah’s overall portfolio will consist of four portfolios, namely the investment portfolio, the Dana Impak portfolio (with a RM6 billion allocation), developmental assets and special situation assets with distinct return expectations and priorities. 

The RM120.3 billion RAV investment portfolio now consists of public equities in developed markets, such as US-listed Palantir Technologies Inc, SoFi Technologies Inc and German-listed Auto1 Group SE, as well as real assets and private equities.