-- Temasek's net profit declined 16% to S$10.7 billion in the
year end March 31 amid tough global environment
-- State investor pivots towards energy and resources, eyes
opportunistic buys in Europe
-- Temasek remains positive on China's long-term prospects, but
flags concerns from U.S. and Europe
(Rewrites first paragraph, updates throughout.)
By Chun Han Wong and Martin Vaughan
SINGAPORE--Singapore state-investment firm Temasek Holdings Pte.
Ltd. will continue scooping up energy and resource assets and make
opportunistic buys in Europe, bidding to stave off the impact from
a sluggish global economy that led to a 16% decline in its net
profit over the past year.
Net profit at the company, led by Chief Executive Ho Ching, wife
of Singapore Prime Minister Lee Hsien Loong, fell to 10.7 billion
Singapore dollars (US$8.4 billion)for the year ending March 31 from
S$12.7 billion in the same period last year, Temasek said in a
report published Thursday. Company officials attributed the decline
to lower contributions from units amid a tough global investment
environment, which is likely to persist given tepid growth in the
U.S. and Europe.
But Temasek's portfolio still grew 2.6% to a record S$198
billion, helped by energy-sector investments in the past year,
including putting about S$3.4 billion into three North American
companies--shale energy firm FTS International, fertilizer producer
Mosaic Co. (MOS) and alternative fuel company Clean Energy Fuels
Corp. (CLNE)
"We believe that energy and resources will continue to be a
growth segment, and has got great long-term potential--that is a
sector (in which) we will have significant exposure," Chia Song
Hwee, Temasek's head of strategy, said at a news briefing.
Temasek makes its earnings from selling assets, as well as
dividends from its portfolio companies, including Singapore's
biggest corporations--including Singapore Airlines Ltd. (C6L.SG),
shipping company Neptune Orient Lines Ltd. (N03.SG) and flagship
telco Singapore Telecommunications Ltd. (Z74.SG). Their recent
performances have soured on rising costs and weaker worldwide
demand, and dragged Temasek's profits.
The state investor--the world's ninth-largest according to the
Sovereign Wealth Fund Institute--has in recent years sought to
shift its focus toward emerging markets away from its home
Singapore market and mature-market financial services, padding out
its China footprint and shelling out on energy and resources
assets.
Energy and resources now contribute a bigger slice of Temasek's
holdings, rising to 6% as at March 31 from 3% a year earlier.
Meanwhile financial services' share of the portfolio slid to 31%
from 36%, mainly due declining market valuations.
But banks still continue to make up the largest portion by
sector of Temasek's portfolio. The fund in recent months pared its
holdings in some China banks while increasing in others, resulting
in little change to its China bank exposure. Temasek now holds a
5.3% stake in Industrial and Commercial Bank of China Ltd.
(1398.HK), a 7.4% stake in China Construction Bank Corp. (0939.HK)
and a 3.7% stake in Bank of China Ltd. (3988.HK).
Temasek remains "positive about the long-term growth prospects
of China," Mr. Chia said, but also warned of "significant" global
contagion risks from sluggish growth in Europe and the U.S.
"We think heightened volatility will be the mainstay of the
investment environment going forward," he said, but added that the
company will still track European opportunities as investors there
continue casting off assets.
The company--led by Chief Executive Ho Ching, wife of Singapore
Prime Minister Lee Hsien Loong--barely eked out a positive total
shareholder return of 1.5% in the year ended March 31, its lowest
since registering negative 30% returns in the year ending March
2009. But officials stressed their long-term investment goals and
pointed to a 15% shareholder return over the last three years.
Temasek spent S$22 billion on new investments in the year ending
March 31, boosting its North American and European holdings to 11%
of its portfolio from 8% a year earlier. Singapore's share of the
company's assets fell to 30% from 32%, while Asia excluding
Singapore now makes up 42%, down from 45%.
The fund said that during the year, it sold S$15 billion worth
of assets, including stakes in Indonesian petrochemical maker
Chandra Asri Petrochemical (TPIA.JK), Singapore-listed Hutchison
Port Holdings Trust (NS8U.SG), India's ICICI Bank Ltd. (532174.BY)
and Chinese real-estate firm Kaisa Group Holdings Ltd.
(1638.HK)
Write to Chun Han Wong at chunhan.wong@dowjones.com and Martin
Vaughan at martin.vaughan@dowjones.com