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PETALING JAYA: The Employees Provident Fund (EPF) is without doubt the government-linked investment company (GLIC) with the deepest pockets, holding significant stakes in 146 Bursa Malaysia-listed companies worth between RM2.19mil and RM5.03bil each, according to Bloomberg.
The table (left) lists EPF’s top 10 shareholdings by market value, but apart from this, the fund’s other significant stakes are 9.53% in YTL Corp Bhd worth RM1.36bil and 11.7% in Malaysian Airlines System Bhd worth RM853.6mil.
In contrast, government investment vehicles like Permodalan Nasional Bhd (PNB) holds significant stakes in 49 companies worth between RM1.7mil and RM3.6bil; Lembaga Tabung Angkatan Tentera (LTAT) holds shares in 24 companies; Khazanah Nasional Bhd in 16.
Bloomberg data did not list Lembaga Tabung Haji as holding shares in any listed company, but according to the fund’s website, last updated on April 30, it has four subsidiaries – TH Plantations Bhd, TH Properties Sdn Bhd, TH Technologies Sdn Bhd and TH Travel & Services Sdn Bhd.
Based on main board-listed TH Plantations’ annual report for the year ended Dec 31, 2006, Tabung Haji is its largest direct shareholder with 117.8 million shares, or 60.07% equity interest.
Outside the top 10 shareholdings, these GLICs also hold significant stakes in large companies.
PNB also holds 13.8% in Chemical Co of Malaysia Bhd worth RM182mil, 13% in Dutch Lady Milk Industries Bhd worth RM101mil and 11.1% in Malaysia Building Society Bhd worth RM34.9mil.
LTAT holds a 5% stake worth RM3.38mil in KL Infrastructure Group Bhd, the operator of the Kuala Lumpur monorail service.
It also holds 6.3% stake worth RM12.4mil in TRC Synergy Bhd that has been awarded a contract for the design, construction, completion, testing and commission of a submarine base for Royal Malaysian Navy at Sapangar Bay in Kota Kinabalu for a contract sum of RM318mil.
Meanwhile, Khazanah also has equity interest of 30%, 10%, 25%, 10%, 6% and 20% in major companies like Time DotCom Bhd, EON Capital Bhd, UDA Holdings Bhd, DRB-HICOM Bhd, Edaran Otomobil Nasional Bhd and D’nonce Technology Bhd, respectively.
21-07-2008: EPF piles up bank, telco stocks
by Joyce Goh & Sharmila Ganapathy
KUALA LUMPUR: The Employees Provident Fund (EPF) has been increasing its stakes in local banks and telecommunications operators, with analysts saying it could be a bout of bottom-fishing.
From July 9 to 11, EPF picked up stocks in Alliance Financial Group Bhd, AMMB Holdings Bhd, Bumiputra-Commerce Holdings Bhd (BCHB), EON Capital Bhd, Hong Leong Bank Bhd and Malayan Banking Bhd (Maybank), filings to Bursa Malaysia show.
EPF has raised its stakes significantly in the country’s two largest banks. As at the beginning of July, its stake in Maybank had grown to 9.8% from 7.13% at the end of last year and that in BCHB to 13.08% from 9.8%.
During the same period, the provident fund also raised its stakes in Alliance, AMMB and EONCap as well as in banks with the lowest non-performing loans (NPL) ratio — Hong Leong Bank and Public Bank Bhd.
EPF upped its stake in Alliance Financial Group to 9.19% from 8.2%; AMMB to 10.54% from 9.6%; and EONCap to 8.66% from 5.29%.
From last December to this month, the fund increased its shareholding in Hong Leong Bank to 8.6% from 7.6% and in Public Bank to 10.4% from 9.18%.
Although many believe the banking industry may be heading into rough waters on the possibility of an interest rate hike and tougher economic conditions, banking analysts are not surprised by EPF’s move.
Standard and Poor’s banking analyst Alexander Chia said: “They are obviously bottom-fishing. From a long-term perspective, they may see good value in banking shares at today’s prices.
“Bank balance sheets are generally solid while asset quality is not an immediate concern. We do not expect the same magnitude of macroeconomic problems as in 1997/98. So it’s possible that some investors think that some banking stocks have already priced in a more dire situation than is justified,” said Chia.
He added that EPF was increasing its holding of banking stocks on the assumption that their prices were overcorrected and they were thus worthwhile buys.
“Some banking stocks like BCHB are oversold. Although in the short term, we may not see any major outperformance by the banking sector as most investors continue to wait and see how the global economic and local political situations pan out… but if you take a longer-term perspective, there is value in banking stocks at current prices,” Chia said.
BCHB, Maybank and Alliance dipped to their 52-week lows about two weeks ago, while the other banking stocks are currently trading at 12% to 45% below their 52-week highs.
According to a head of research, banking stocks are currently trading below their typical level. “Traditionally, banking stocks trade above two times price-to-book but currently, they are trading below that. There is clearly value in some of the banking stocks… but there are risks to their earnings forecasts just like any other stock,” he added.
An analyst with a foreign research house agreed, saying that banking stocks are attractive at current levels but they also carry risks.
“The risk of an interest rate hike having a negative impact on banks is there. But that also depends on how the banks manage it,” said the analyst, adding that the banks are well capitalised at present.
EPF has also been steadily increasing its shareholdings in telecommunication stocks, buying into DiGi.Com Bhd (DiGi), Telekom Malaysia Bhd (TM) and TM International Bhd (TMI). The fund is a substantial shareholder in all three companies.
It began accumulating DiGi shares on June 26, picking up 18,500 shares and a further 30,000 shares the following day in the open market, raising its direct shareholding to 8.63%.
It continued buying the stock right up to July 11, when it snapped up 430,000 DiGi shares, pushing up its shareholding to 9.04%.
However, it appeared that EPF’s bigger focus was TM. It snapped up large chunks of TM shares on June 18 and 19, raising its stake to 12.22%. A filing to Bursa Malaysia last Thursday showed that EPF acquired 2.66 million shares on July 8 and 9 and disposed of 1.13 million shares on July 8, still upping its stake in TM to 12.63%.
The provident fund also showed buying interest in TMI, which was floated in April. It bought 1.62 million TMI shares on June 24 and 25, raising its shareholding in the company to 11.23%. It continued picking up TMI shares through July 11, lifting its stake to 11.78%.
The Kuala Lumpur Composite Index (KLCI) has shed 69.79 points, or 5.94%, so far this month, hitiing the year’s low of 1,105.4 points last Friday.
Bloomberg data showed DiGi and TM share prices have outperformed the KLCI by 19.73% and 35.64%, respectively this year, while TMI has underperformed the benchmark index by 7.54% since its flotation.
DiGi’s share price closed 20 sen lower at RM23.70 last Friday while TM perked 4 sen to RM3.38 and TMI closed unchanged at RM6.20.
Wednesday July 23, 2008 EPF steps up purchase of stakes in local firms
By JOSEPH CHIN
PETALING JAYA: The local stock market, which has come under selling pressure in recent weeks, saw the Employees Provident Fund (EPF) stepping up its acquisitions of blue chips, including telecommunications and plantation stocks, especially on July 14 and 15.
Filings with Bursa Malaysia showed that it acquired 5.1 million shares in Sime Darby Bhd, increasing its total shareholding in the plantation heavyweight to 12.9% or 775.13 million shares.
It had also raised its shareholding in IOI Corp Bhd after acquiring 4.83 million shares and raising its stake to 9.59% or 573.07 million shares.
It also bought 1.31 million shares in IJM Plantations Bhd, enlarging its stake to 43.49 million shares, or 6.8%.
EPF also took up 185,600 shares in United Plantations Bhd, in which it now has a 10.4% stake comprising 21.65 million shares.
Telekom Malaysia Bhd (TM) was also in focus, with the board buying 4.35 million shares and disposing of 2.08 million shares from July 10 to 17. Following these transactions, EPF now holds 453.91 million shares, or 12.69%, in TM.
The fund raised its shareholding in DiGi.Com Bhd to 68.18 million shares, or 8.77%, after buying 399,100 shares.
After buying three million shares in IJM Corp Bhd, it now owns 180 million shares, or 21%. It also acquired one million shares in YTL Corp Bhd and 1.06 million shares in YTL Power International Bhd.
Malaysian Airline System Bhd, whose shares had come under selling pressure following the record high crude oil price, saw the EPF acquiring 126,900 shares, thereby boosting its stake to 208.12 million shares, or 12.45%.
Analysts said after the recent sell-down on plantation stocks, the market was seen to have bottomed out.
They said concerns about a slowdown in economic growth and political issues had pushed the valuations of the stocks to below 2002-2003 levels.
OSK Investment Research head Kenny Yee said the KL Composite Index (KLCI) had found a strong support at the 1,090-point level.
“Looking at the volume, they (funds like EPF) are bargain hunting for stocks where value had emerged.
“From another perspective, the selling has been drying up as from today,” he said, adding that the funds were nibbling on oversold index-linked counters.
However, he said, since the rebound was not that steep, investors could still buy blue chips and stocks with good dividends. The KLCI closed 6.09 points higher at 1,109.57 yesterday but is down 325.43 points, or 22.6%, from 1,435 early this year.
The pension fund is now seeking other options to create more liquidity without it losing too much, says its chief executive officer
THE Employees Provident Fund (EPF) said it ended talks with potential buyers for part of its stake in RHB Capital Bhd, the nation's fourth biggest lender, after the stock market tumbled.
The EPF, which manages RM328 billion of investments, had planned to sell a 17 per cent stake in RHB to cut its holdings in the bank to 35 per cent. The sale would have boosted the number of shares traded on the open market, and the fund has said it will now seek other options.
"We have stopped looking for buyers since the market decline" from June, EPF chief executive officer Datuk Azlan Zainol said yesterday in an interview in Kuala Lumpur.
"The price went down and there are no takers. We are looking at how to create more liquidity without the EPF losing too much."
RHB shares have fallen 42 per cent from the RM7.20 selling price in a May agreement to divest a 25 per cent stake to Abu Dhabi Commercial Bank PJSC. The sale fetched RM3.9 billion.
The benchmark Kuala Lumpur Composite Index has fallen 25 per cent this year, heading for its biggest annual slump in seven years.
RHB fell six sen, or 1.4 per cent, to close at RM4.20 on Bursa Malaysia yesterday.
"The setback is in terms of share valuation," said Azlan, who is also a non-executive director at the bank. "With a price-earnings ratio of about eight times, it's undervalued. The bank itself is running very well as shown by the recent results."
The price-earnings multiple is lower than the average 11 per cent for stocks on the KLCI.
RHB said last Thursday that second quarter profit rose 67 per cent to RM271.1 million from a year earlier, boosted by higher net interest income and lower bad-debt provisions.
The EPF said RHB and Abu Dhabi Commercial Bank are "exchanging ideas and working on several deals" to help it achieve a target of doubling profits by 2010. Azlan declined to disclose the details. - Bloomberg
THE Employees Provident Fund, Asia's fourth-largest state-run pension system, said it will rein in overseas investments to protect its capital as global financial markets tumble.
The nation's biggest retirement fund, which manages RM328 billion (US$95 billion), scrapped a plan to double its purchases of stocks, bonds and properties outside the country to US$4 billion (RM13.8 billion) this year, chief executive Azlan Zainol said in an interview in Kuala Lumpur on Thursday.
"We have been approved to invest up to US$6 billion (RM20.7 billion) overseas but have kept it at US$1.8 billion (RM6.2 billion) because the prospects are listless in the next few months," he said.
"The competition from Middle East money is also very strong and we don't want to ramp it up for the sake of doing so."
The global stock market rout has erased more than US$13 trillion (RM44.6 trillion) this year as the collapse of the US subprime mortgage market led to more than US$507 billion (RM1.7 billion) of credit losses and writedowns at global banks.
The MSCI Asia-Pacific Index of regional stocks has tumbled 25 per cent in 2008, almost twice the drop in the Standard & Poor's 500 Index.
The Kuala Lumpur-based retirement fund, also known as EPF, said in November it would raise overseas investments to US$4 billion in 2008, including buying Islamic debt sold by Persian Gulf governments and companies, before lifting the proportion to 10 per cent of its assets by 2012.
EPF has farmed out its overseas investments to fund managers including Pheim Asset Management Asia Pte, Aberdeen Asset Management Ltd and Japan's biggest investment banks including Nomura Holdings Inc.
Still, investors including Templeton Asset Management Ltd's Mark Mobius say the stock market rout has made equity investments attractive, especially in emerging markets.
"Growth in these countries is continuing at a good pace," Mobius said in an interview in Singapore on Thursday.
"We're finding so many companies now with price-earnings ratios of single digit. Some of them are paying good dividends. So we're finding lots of opportunities."
The majority of EPF's US$95 billion (RM327.8 billion) assets are invested onshore, where a third is ploughed into ringgit-denominated government bonds.
Another 40 per cent is invested in corporate bonds and loans, and 22 per cent in local stocks.
"We have been net buyers of Malaysian shares and government bonds in the last few months," Azlan said.
"We have added banking, plantation and infrastructure stocks, those with good long-term dividend yields." He declined to reveal the amount.
Government bond yields may hold at current levels because a sell-off by foreign investors is still "manageable," he said.
Benchmark 10-year yields have jumped almost two-thirds of a percentage point in the past three months to the highest since July 23.
EPF also expects Bank Negara Malaysia to keep its overnight policy rate unchanged at the two remaining policy meetings this year as economic growth slows.
The rate was kept at 3.5 per cent at 19 meetings since April 2006.
"We don't see any hint from the central bank" in terms of possible changes to the interest-rate direction, Azlan said.
"Our reading is that the overnight policy rate will remain." - Bloomberg
The property group will sell 30 per cent of Jelas Puri, the developer of the RM1.06 billion 'The Paradigm', to the pension fund for RM87.36 million cash
THE Employees Provident Fund (EPF), a cash-rich retirement savings fund, plans to invest almost half a billion ringgit in a commercial project in Petaling Jaya, a deal that sees it tying up with WCT Bhd, a construction and property group.
The EPF is also a substantial shareholder in WCT, holding 17.22 per cent.
The tie-up also comes as the cost of borrowing money in the capital markets has risen. A weak stock market makes it difficult for companies to raise funds.
"(The deal) provides an opportunity for WCT to raise funds for the general working capital requirements of the WCT group and to finance viable property development projects that may arise in the future," WCT said.
Under the deal, WCT will sell 30 per cent of Jelas Puri Sdn Bhd (JPSB), the company that will develop the RM1.06 billion project, to the EPF for RM87.36 million cash. This is due to be completed in 2011.
JPSB will also issue five-year redeemable secured loan stocks worth some RM390 million to the EPF. The loan stocks carry interest of six per cent a year.
The bulk of the loan stocks, or RM320 million, will be issued in the first quarter of 2011, and the rest in the fourth quarter of the same year.
JPSB is developing "The Paradigm", WCT's first high-rise commercial project in Petaling Jaya.
Last year, the local authorities approved the revised plan for the project. It will feature four blocks of 25- to 33-storey office buildings, one block of 15-storey office suites, one block of 20-storey office suites and a six-storey shopping complex.
However, JPSB is preparing a new application to revise plans for the shopping centre and the four blocks of 27- to 33-storey office buildings, WCT said.
The project has a gross development cost of RM1.06 billion, and JPSB has spent some RM107 million to date.
Shares of WCT on Bursa Malaysia closed unchanged at RM2.53 yesterday.
