By KINIBIZ
This week, Khazanah Nasional released its 2015 results. What catches the eye is the dividends it declared — having just made RM1.17 billion in pre-tax profits last year, it is giving 90% of that amount to the government as dividends. That comes to RM1.05 billion.
That means Khazanah is retaining just 10% of its profits going into 2016, a year in which it expects turbulence and uncertainty to continue. Should Khazanah perhaps be allowed to retain more so as to allow itself that much more flexibility?
To be fair, Khazanah managing director Azman Mokhtar said the dividends were declared following technicalities involved in its dividend policy. “It is good to have a stable dividend policy – not good to yo-yo,” he said to reporters.
However a look at Khazanah’s dividend data going as far back as 2004 raises eyebrows. In terms of percentage of pre-tax profits, its payouts have fluctuated between just above 9% (in 2006) and hitting as high as 78% (in 2008) prior to 2015. It even paid dividends still when it was registering a loss in 2005.
Perhaps it would be in public interest for the government to disclose the mechanism that decides Khazanah’s dividend payout year after year. After all, it is a national sovereign wealth fund and its continued wellbeing and sustained capacity to reap positive returns for our national wealth is a matter of great interest.
That said, falling oil and gas revenue means the government will welcome all additional revenue that comes its way. By Jan 28 we will see amendments tabled for the 2016 Budget as global Brent crude prices have fallen close to the US$30 per barrel mark compared to the projected average of US$48 per barrel when the Budget was first drawn.
While retaining so little profit going into 2016, Khazanah said its financial capacity remain unaffected as it navigates choppy waters for opportunities to seize. “Financial capacity is not an issue,” said Azman to reporters. “Being nimble is quite key, especially when there is so much volatility.”
One has to wonder if its financial capacity would be that much greater if it is allowed to hang on to more of its profits going forward.
Anyway here are some of our best news, analyses and comments over this past week for your weekend catch-up:
Khazanah pays higher dividends as profit falls 63%. Sovereign wealth fund Khazanah Nasional declared higher dividends to the government in 2015 despite a 63% plunge year-on-year in pre-tax profit, retaining just 10% of its earnings going into 2016. Khazanah managing director Azman Mokhtar said paying 90% of profits as dividends was not an arbitrary decision. Read here.
Why Bank Negara should not increase interest rates. The interest rate is usually used to mop up excess liquidity in the market or cool down an overheated economy. With GDP growth expected to contract this year, Bank Negara Malaysia cannot afford to raise interest rates, argues our resident cat. Read more here.
53-year highway concessions? Time to stop this silliness. Major public infrastructure like highways are sometimes contracted out to the public sector in most parts of the world, that’s not new. But in Malaysia the concessions can seem never-ending. The latest concession signed is also probably the longest seen yet at 53 years. Do we need it though? Read here.
AirAsia X expects to return to the black in 4Q15. Long-haul carrier AirAsia X Bhd, which had been struggling to stay in the black, expects to return to the black in terms of operational profit in the fourth quarter of 2015 (4Q15) on the back of improved yields and load factor, said group chief executive officer Benyamin Ismail. Read more here.
Is the Netflix promise overrated? US-based Internet TV service provider Netflix has finally arrived in Malaysia, albeit a little earlier than many viewers expected. Its arrival has generated a lot of buzz on social media and in the media in general, while direct competitor iflix expressed joy that a new player is in town. But the big question is will it have staying power? Read here.
‘Repco Low’ found guilty of market manipulation in 1997. Former Repco Holdings Bhd (Repco) executive chairman Low Thiam Hock, popularly known as Repco Low, has been found guilty of market manipulation involving Repco shares by the Kuala Lumpur Sessions Court. Read further here.
Could 1MDB have got better deals? In an interview with New Straits Times, 1Malaysia Development Berhad (1MDB) president Arul Kanda Kandasamy said the state-owned company that he leads could have obtained better deals in the sale of its assets had it not been for the opposition who scared investors away. Read on here.
State of the world. Last month alone, we saw the Fed raise its interest rates and Opec raise its output ceiling. This has thrown more uncertainty into the already-pressured global economy. What can we expect this year? In a five-part series, five global experts, leaders in their fields, offer their insight into what may shape 2016 and what we can expect to see. Read here.
If you like these stories, you will not want to miss out on our latest bimonthly magazine, out now on major newsstands. At just RM15, Issue 019, featuring State of The World as the cover story, contains a curation of our more timeless features and commentaries that you should not miss out on.
Because whether you prefer online or print, morning coffee tastes so much better when you have the sharpest reads in town to sip to.
— by Khairie Hisyam Aliman, News Editor
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