KUALA LUMPUR (March 2): Khazanah Nasional Bhd said on Wednesday (March 2) its profit from operations fell to RM670 milion in 2021 from RM2.9 billion in 2020 mainly due to continuing financial assistance extended to the group's airline and tourism companies still weathering headwinds from the impact of Covid-19 pandemic-driven movement restrictions.
In a statement, Malaysian sovereign wealth fund Khazanah said its net asset value (NAV), however, grew to RM86 billion from RM79 bilion and that Khazanah declared a dividend of RM2 billion to the Malaysian government for 2021.
"[2021] profit was also impacted by lower fair value gains and lower dividend income from investee companies on the back of subdued 2020 earnings.
"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.
"Khazanah continues to maintain its financial discipline. Operating expenses were reduced to RM420 million from RM490 million in 2020. 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," Khazanah said.
Khazanah via Malaysia Aviation Group Bhd owns Malaysia Airlines Bhd, according to the sovereign wealth fund's website.
Meanwhile, Khazanah undertakes its tourism operations via Themed Attractions Resorts & Hotels Sdn Bhd, the website shows.
Khazanah managing director Datuk Amirul Feisal Wan Zahir said in the Wednesday statement, which was issued to reporters covering the press conference, that despite the challenging backdrop of movement restrictions and reduced economic activity globally, Khazanah managed to create value, generate strong investment returns and grow its 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,” said Amirul Feisal, who hosted on Wednesday his first Khazanah annual briefing as its managing director.
The statement said Amirul Feisal during the event also presented Khazanah’s long-term strategies that reaffirm the sovereign wealth fund’s commitment to advancing Malaysia’s economy and society through Khazanah's new Dana Impak allocation which aims to, among others, catalyse new growth sectors and play a more active institutional stewardship role.
"New growth sectors will be catalysed via the Dana Impak allocation of RM6 billion over five years," the statement said.
Fund outlines four strategic imperatives
Looking ahead, Khazanah said its had set four strategic imperatives to deliver sustainable value for Malaysians.
Khazanah's four strategic imperatives are coined under the phrases "advancing Malaysia", "building on our financial strength", "creating a sustainable future" and "developing a winning team."
The "advancing Malaysia" imperative will see Khazanah undertaking four key initiatives to deliver impactful outcomes for the nation, according to Khazanah.
"Dana Impak will invest in catalytic sectors that strengthen the country’s resilience and open new growth opportunities. Six themes have been identified, namely the digital society and technology hub, quality health and education for all, decent work and social mobility, food and energy security, building climate resilience, and competing in global markets.
"[Being an] active participant in Malaysia’s capital markets, spurring economic growth.
"Represent Malaysia through its global investments and partnerships to facilitate flows of knowledge, networks and investment opportunities.
"Build capacity and develop vibrant communities for the benefit of Malaysians," Khazanah said.
Meanwhile, the "building on our financial strength" imperative is core for Khazanah, and it said it does this through a well-diversified portfolio that can achieve its long-term risk-adjusted return targets, as well as maintaining financial discipline.
"Khazanah will also look to turn around some of its assets, especially those facing not only the impact of the pandemic but also structural issues in the sector," it said.
The "creating a sustainable future" imperative is the third strategy that will see Khazanah embed environmental, social and governance (ESG) considerations into everything it does, from how the organisation makes investment decisions to how its employees go about their daily work, Khazanah said.
"We also hope to play a leading role in shaping an equitable and responsible ESG transition for Corporate Malaysia," the sovereign wealth fund said.
Khazanah said the "developing a winning team" imperative is crucial in delivering Khazanah's purpose by instilling a culture of high performance and collaboration, equipping employees with future-proofed skill sets and adopting new technologies in Khazanah's daily work.
"We must continue to rally together and take this opportunity to chart a path towards growth, emerging stronger as a nation. We truly believe that Khazanah’s refreshed strategy will allow us to achieve this, and to this end, we call upon our fellow Malaysians to join us on this journey towards advancing Malaysia,” Amirul Feisal said.
Looking back, Khazanah said that despite the Covid-19 pandemic-driven challenging conditions, Khazanah achieved several milestones, including the timely completion of Malaysia Aviation Group’s restructuring which saw the reduction of RM15 billion in liabilities.
Khazanah said the restructuring enables Malaysia Aviation Group to be more financially resilient and readies its airline operations for the anticipated recovery in air travel.
"Khazanah maintained support for its developmental assets, such as Themed Attractions Resorts & 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," Khazanah said.