Friday, 25 November 2016
Malaysia's largest fund-manager unveils strategic plan
BY HANIM ADNAN
Growth strategy: Wahid (right) speaking at the briefing on PNB Strategic Plan 2017 - 2022 as Abdul Rahman looks on. To attain its vision to be a distinctive world-class investment house, PNB has formulated the Strive 15 programme which comprises three pillars – enhancing sustainable returns, effective investment management and driving operational excellence.
KUALA LUMPUR: Permodalan Nasional Bhd (PNB), the country’s largest fund-management company which has a new team at the helm, has unveiled a six-year strategic plan to deliver sustainable, consistent and competitive returns to its unitholders.
PNB has set a target to increase its total assets under management to about RM350bil by 2022 from about RM259.49bil currently.
In a rare press briefing on its performance, PNB disclosed that was expecting a gross income of RM18.64bil and a net income of RM15.18bil with a return on assets of about 6.1%.
According to group chairman Tan Sri Abdul Wahid Omar, PNB has been able to deliver consistent returns to its unitholders, with over RM136bil having been paid out since its inception 38 years ago.
PNB is currently the market leader in the local unit trust industry, managing RM220bil in unit trust assets with 12.8 million accounts, representing over a 60% market share in terms of total fund value.
PNB also expects the dividend payout this year to be maintained, said Wahid as he unveiled PNB’s Strategic Plan 2017-2022 yesterday.
Meanwhile, PNB president and group CEO Datuk Abdul Rahman Ahmad said PNB recognised the challenges ahead in the period of global uncertainty, given the flat global economic growth and low interest-rate environment.
“This is exacerbated further by the negative trend of the FBM KLCI for the past three consecutive years attributed by the weak shareholders’ return of large-cap Malaysian corporates over the period,” he added.
PNB is a major investor in Bursa Malaysia with investments of nearly RM170bil or 10% of the market capitalisation of the bourse.
Its strategic holdings are in Malayan Banking Bhd (Maybank), Sime Darby Bhd, UMW Holdings Bhd, S P Setia Bhd, Chemical Company of Malaysia Bhd and MNRB Holdings Bhd.
It also has sizeable stakes of more than 10% in large caps such as Axiata Group Bhd, Tenaga Nasional Bhd, CIMB Group Holdings Bhd and Telekom Malaysia Bhd.
To counter the challenges ahead, Abdul Rahman said the PNB Strategic Plan 2017-2022 would chart the way forward for the group to deliver sustainable, consistent and market-leading returns.
However, he said that corporate Malaysia has to perform.
“Companies should not undertake mergers and acquisitions without enhancing shareholder value. Every single action that they take should create shareholder value,” he added.
To attain PNB’s vision to be a distinctive world-class investment house, PNB has formulated the Strive 15 programme which comprises three pillars – enhancing sustainable returns, effective investment management and driving operational excellence.
Abdul Rahman said: “We have developed a clear strategic plan to address current and future challenges, thus ensuring PNB can sustain its performance for the next six years and beyond.”
He pointed out that PNB would continue to invest in high-performing Malaysian corporates.
“Our cash is sizeable and we will continue to invest whenever the opportunity arises, including in fixed income when the time is right.”
At the moment, out of PNB’s investment portfolio, the cash position is about 20% and fixed income is 4%.
A 20% cash holding is about RM50bil in terms of absolute amount.
Towards this end, Abdul Rahman said that it would be redeploying some assets to reduce its cash position when the opportunity arises.
“We think that while it is important to hold cash, RM50bil is a bit too much,” he said.
Wahid added that there were a lot of things that could be done and achieved with PNB’s existing strategic investments.
“We will work closely with the management and board of our strategic investment companies to see how we can further maximise returns and create more value for these companies,” said Wahid.
Recently, there was a news report of a break-up of Sime Darby, the conglomerate in which PNB has close to a 55% controlling stake.
Spculation has been rife that both Wahid and Abdul Rahman were keen on seeing the board of Sime Darby come up with a plan to unlock value by having more individually listed entities as opposed to a single public-listed parent holding an array of different businesses.
On PNB’s cash position, Abdul Rahman said that the current cash position of 20% of total assets was definitely not optimal and that PNB would be looking to deploy those monies to work soon.
“We will source for new strategic investments and core portfolio companies. Private equity and fixed income will be another asset class that we are looking to increase exposure to,” said Wahid.
“For now, given the weak ringgit, we will not move into acquiring global assets.”
Abdul Rahman, meanwhile, is bullish on the positive growth of PNB’s funds, given the lows in the earnings cycle, historically low foreign ownership and the fact that “not often the KLCI underperforms for three consecutive years”.