DESPITE volatile global market conditions, sovereign wealth fund Khazanah Nasional Bhd has posted a strong RM5.9 bil profit from operations in its FY2023 ended Dec 31, 2023 - a significant 268.7% surge from RM1.6 bil in the prior financial year.

Notably, 2023 was challenging for Khazanah and the global market given the anticipated peak US Federal Reserve rates, a slowdown in elevated inflation, tight monetary conditions, a concentrated rally in artificial intelligence (AI), weak growth in China, and ongoing geopolitical conflicts.

Khazanah’s managing director Datuk Amirul Feisal Wan Zahir attributed the fund’s three-fold escalation in profit to its commitment to leverage upon value creation efforts and portfolio re-balancing approach to strengthen its balance sheet and towards building a resilient financial position.

“With 2024 expected to be yet another challenging year globally with heightened political uncertainties, advancing Malaysia will remain our over-arching theme to steer our strategies and actions towards delivering national development and ensuring a sustainable future for Malaysia,” he pointed out in a media statement.

Delving into Khazanah’s performance, the fund said its RM5.9 bil profit earnings were driven by higher dividends and distributions from investee companies in addition to fair value gains and capital preservation.

Its debt increased marginally to RM50.2 bil from RM49.1 bil in the previous year while its realisable asset value (RAV) over debt ratio remained healthy at 2.7x.

“NAV (net asset value) grew from RM33 bil in 2004 to RM85 bil in 2023, resulting in a compounded annual growth rate of 5.1%, hence fulfilling Khazanah’s mandate to deliver sustainable returns to the nation and growing Malaysia’s long-term wealth,” contended Khazanah.

“The investment portfolio achieved a five-year rolling NAV TWRR (time-weighted rate of return) of 2.9% and a one-year NAV TWRR of 5.7% amidst the challenging market landscape within this period.”

According to Khazanah, the returns improved in 2023, driven by the developed market portfolio and a partial recovery of its listed investee companies in Malaysia.

In 2023, Khazanah deployed RM7.3 bil in new investments and raised RM7.2 bil from asset monetisation.

Its airline and tourism assets showed improved financial and operational performance with Malaysia Aviation Group Bhd (MAGB) recorded positive NIAT (net income after tax) for the first time in a full year while the fund’s destination resorts and hotels (DRH) made a strong recovery post-pandemic.

“No additional capital injections were required during the year,” added Khazanah.

In April 2023, the fund received its first issuer credit rating of A3 and A- from Moody’s Investors Service and S&P Global Ratings respectively.

These investment grade credit ratings affirm Khazanah’s strong ability to meet its financial commitments, track record of sound investment and funding policies, and important role in growing Malaysia’s long-term wealth.

Khazanah paid a dividend of RM1b for 2023 to the Malaysian government with RM18.1 bil cumulative dividends paid since 2004. - March 11, 2024

https://focusmalaysia.my/khazanahs-2023-operations-earnings-jump-3-fold-to-rm5-9b-paid-rm1b-of-dividends-to-govt/