KUALA LUMPUR (Jan 2): Permodalan Nasional Bhd (PNB) hopes earnings growth for Malaysian corporates this year will come in higher than the 6.9% forecast.
This comes on the back of the consensus 2017 listed companies' earnings growth of 5.7%, which was below PNB's earlier expectation, said its chairman Tan Sri Abdul Wahid Omar.
In his New Year message issued today, Abdul Wahid highlighted some of the priorities in the PNB Strategic Plan for 2018, which include ensuring PNB’s strategic companies focus on improving their business fundamentals, earnings and dividend payout which will lead to improved total shareholders' return (TSR), implementing its strategic asset allocation to enhance PNB returns sustainably and within its risk tolerance.
"This will include increasing our exposure to private investments both domestically and internationally subject to the right opportunity," he said.
The third is to engage with PNB’s core companies where it has at least 10% shareholding or RM1 billion in value to drive better performance.
“It is important for Malaysian corporates to improve their earnings growth to generate higher TSR,” he added.
Abdul Wahid reiterated the need to designate a portion of shares in Malaysian banks (such as Malayan Banking Bhd, CIMB Group Holdings Bhd and RHB Bank Bhd) that have sizeable Islamic finance businesses as "Islamic" or "I" shares to overcome the lack of syariah-compliant stocks or equity instruments in financial services.
"We were hoping for the 'I' shares initiative to be approved in 2017 but unfortunately this has yet to materialise. We will continue to engage with relevant stakeholders to hopefully make this a reality in 2018," he said.
Abdul Wahid had proposed for 20% of Maybank shares to be categorised as “I” shares in August last year.
Wahid also explained that it is not possible for Maybank Islamic, which is wholly-owned by Maybank, to be listed separately on Bursa Malaysia.
“This is not possible as Maybank Group adopts an 'Islamic First' strategy where the Islamic finance operations are an integral part of Maybank with common infrastructure and distribution channels. What is possible is to designate say 20% of Maybank shares as 'I' shares where the dividend income can be traced or 'ring-fenced' from Maybank Islamic and Maybank's other syariah-compliant activities,” he said.
He added that based on Maybank's current market capitalisation of RM100 billion, the Maybank "I" shares will potentially have a market capitalisation of RM20 billion, which is three times larger than the market capitalisation of BIMB Holdings of RM7 billion. According to Wahid, the same concept can be replicated for CIMB, RHB and even Bursa Malaysia itself where 60% of the counters listed (based on market capitalisation) are syariah-compliant.
Wahid also addressed some of PNB's achievements during 2017, which included improved financial performance with 7.1% increase in net income to RM15.4 billion.
“This enabled us to increase total income distribution (comprising of dividend, bonus and special bonus payments) for ASB to 8.25% for the first 10,000 units and 7.25% for the remaining balance held by each ASB unitholder,” Wahid said.
Another one is the successful transformation of strategic companies resulting in significant increase in the market capitalisation of PNB’s strategic companies in 2017 by RM39 billion. This represents a weighted average total shareholder returns (TSR) of 26%, double the returns on KLCI of 13.2%.
He also pointed to the Greater Syariah compliance resulting in the Selangor and Penang State Fatwa Committees issuing the permissible or 'Harus' edict for investments in PNB funds, which is consistent with the edict issued earlier by the National Fatwa Council in 2008.
There is also the successful migration of its ASNB Fund Distribution System towards better service delivery and full digital experience, which enabled PNB to soft-launch its www.myasnb.com portal for online transactions.
PNB also managed to obtain approval from the government for PNB’s 'blue ocean' approach towards inculcating savings & financial planning from birth - The Amanah Dana Anak Malaysia 2050 or ADAM50 where Malaysians born from 1 January 2018 onwards will be given 200 free starter units in ASB (for Bumiputeras) or AS1M (for non-Bumiputeras).