KENANGA INVESTORS BERHAD - 2021 |
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| Report ID | 60538900361 | Popularity | 784 views 15 downloads | |||||
| Report Date | Oct 2021 | Product | ||||||
| Company / Issuer | Kenanga Investors Bhd | Sector | Finance | |||||
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| Rationale |
MARC has affirmed its investment manager rating of IMR-2 on Kenanga Investors Berhad (KIB). Rationale The rating primarily reflects KIB’s well-established investment management process, sound risk management practices and strong operating track record. These factors are moderated by its relatively small asset size and an adequate financial profile. KIB is a wholly-owned fund management subsidiary of Kenanga Investment Bank Berhad (Kenanga), managing unit trust funds and investment funds through both conventional and Shariah-compliant investment schemes. KIB is a relatively modest fund management company, with assets under management (AUM) of RM13.1 billion accounting for about 1.4% of total AUM in Malaysia as at end-June 2021. KIB offers various investment products catering to different investment appetites, focusing mainly on domestic investments. Equity funds constituted the bulk of AUM at 50.2%, followed by fixed income at 38.4%, balanced funds at 6.9%, money market funds at 4.2% and structured funds at 0.3%. We view KIB, as part of the Kenanga Group of companies, to have the relevant expertise and adequate resources to execute its fund strategies and meet their obligations. To date, KIB has 27 experienced investment personnel with several senior members having more than 10 years of significant experience in both domestic and regional markets. KIB will continue expanding its portfolio catering to different risk appetites. KIB continues to benefit from operational and financial support extended by its parent through shared resources and a common brand name. Certain support functions are managed at the group level, such as information technology, human resources, internal audit and risk management. MARC views that the shared network among the group has yielded KIB with some savings. KIB’s investment management is underpinned by a comprehensive investment analysis and portfolio construction process which are supported by appropriate systems. KIB’s technology platform which supports investment decision-making, trading activities and backroom operations was found to be sufficiently robust and befitting the nature and complexity of its activities. KIB’s continued adherence to reporting commitments is viewed positively. Investment portfolios are subjected to periodic reviews to assess their performance by which they are measured against established benchmarks. KIB’s governance and risk management framework remains sound, supported by active oversight by the board of directors and its parent’s risk management committee. Comprehensive policies and infrastructure are put in place to manage risk, which are well supported by information systems for risk analysis and compliance-checking functions. Operational risk is managed through forward- and backward-looking assessments, including regular self-assessments aimed at identifying risk areas and establishing key risk indicators to provide early warnings. Notably, KIB’s unit trust funds have consistently performed better than its benchmarks and are at par with its peers. The fund manager has also received several awards for selected funds. KIB’s financial profile has strengthened over the years, driven by higher AUM. As at end-2020, KIB’s revenue grew 38.7% y-o-y to RM145.5 million, underpinned by higher management fees of RM104.5 million as well as service charges of sales of units of RM37.2 million, while pre-tax profit increased to RM12.6 million. The positive performance continued into 2021; revenue stood at RM111.8 million in 1H2021, doubled of that registered in 1H2020, while pre-tax profit increased threefold to RM15.2 million over the same period. Key rating factors • Established investment process • Strong governance and risk management framework • Modest-sized asset management company • Moderate financial profile |
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