KENANGA INVESTMENT BANK BERHAD INTEGRATED ANNUAL REPORT 2024 WE ARE KENANGA OUR SUSTAINABILITY APPROACH LEADERSHIP STATEMENT HOW WE ARE GOVERNED FINANCIAL STATEMENTS SHAREHOLDERS’ INFORMATION ADDITIONAL INFORMATION OUR VALUE CREATION APPROACH 19 18 The Group’s Stockbroking division demonstrated strength in 2024, navigating periods of heightened market volatility, including the January market sell-off and the sharp fluctuations in Hong Kong equities in October. Despite these challenges, the division performed commendably, supported by strong recovery efforts and disciplined cost management, enabling it to adapt and maintain stability throughout the year. While credit losses were incurred due to these market events, effective recovery measures and disciplined cost controls allowed the division to achieve a PBT of RM15.4 million in 2024, compared to RM16.1 million in the previous year. It also maintained an overall market share of 9.6%, with a 25.3% share in the retail segment, reinforcing its position as a key player in Malaysia’s brokerage industry despite increasing competition from new entrants. The Equity Derivatives business delivered a strong performance, maintaining its leadership as the largest issuer of warrants in Malaysia and holding the highest market share in warrant participation. Demand for Over-the-Counter solutions, particularly among corporate clients, also increased significantly, broadening the division’s product offerings. Its success in this space was recognised with multiple accolades from regional financial organisations such as Most Innovative Use of Technology – NagaWarrants By Kenanga by FinanceAsia Awards 2024, and Best Use of Social Media – Bronze by The Loyalty & Engagement The Group’s Asset and Wealth Management (“GAWM”) arm comprises Kenanga Investors Group (“KIG”), which includes Kenanga Investors Berhad (“KIB”), Kenanga Islamic Investors Berhad (“KIIB”), Eq8 Capital Sdn Bhd (“Eq8 Capital”), and the newly established Kenanga Trustees Berhad (“KTB”). Complementing KIG is the KIBB Digital Investment Management arm, and together they form the GAWM division. In 2024, GAWM reported a PBT of RM47.0 million, compared to RM58.7 million in the previous year. The results reflect provisions incurred during the year, as well as the company capitalising on shifts in market sentiment, implementing strategic initiatives to support future growth and strengthen business resilience. GAWM remains focused on expanding its distribution reach, new market segments and a comprehensive suite of offerings encompassing conventional collective investment schemes, robo-advisory services, portfolio management, and a spectrum of alternative investments. Through these capabilities, GAWM is able to diversify and grow its client base, catering to mass-retail, middle-high-income, and ultra-high-net-worth investors locally and regionally. Building on this foundation, KIG has prioritised innovation, introducing new investment solutions to meet evolving investor needs. During the year, KIG launched the Kenanga Alternative Series, a suite of funds designed to address investors’ evolving needs while capitalising on emerging opportunities in dynamic market segments. As part of this launch, the Kenanga Alternative Series: Income Opportunities Fund was introduced, aiming to generate stable and attractive returns by investing in an openended Asian private credit fund specialising in the alternative lending sector managed by Helicap, a leader in alternative lending. Kenanga Group’s Investment Banking division delivered a solid performance in 2024, with PBT rising to RM6.2 million from RM5.7 million in the previous year. Despite impact of provisions, the division demonstrated its ability to navigate complex market conditions, capitalising on strategic advisory mandates and well-structured transactions. The Corporate Finance and Equity Capital Markets (“ECM”) teams successfully executed a series of Initial Public Offerings (“IPO”) across diverse industries, reinforcing its position as a key player in Malaysia’s capital market. Notable transactions included the listing of Well Chip Group Berhad, marking Malaysia’s third successful pawnbroking IPO, and Kucingko Berhad, the country’s first public listed animation company. The division also served as Principal Adviser, Sponsor, Underwriter, and Placement Agent for Vetece Holdings Berhad, as well as played a critical role in the successful transition of Supreme Consolidated Resources Berhad from the LEAP Market to the ACE Market. In addition, the ECM team acted as the Joint Underwriter and Joint Placement Agent for MKH Oil Palm (East Kalimantan) Berhad’s IPO exercise. Beyond IPOs, the division further strengthened its position as a trusted advisor in advisory transactions as well as in fundraising, supporting transactions such as the mandatory takeover of Ranhill Utilities Berhad by SIPP Power Sdn Bhd, a subsidiary of YTL Power International Berhad. It was also the independent advisor to Icon Offshore Berhad on its acquisition of maritime assets. Its ability to deliver tailored financing solutions was demonstrated in Magma Group Berhad’s RM100 million redeemable convertible notes issuance, designed to enhance its capital structure. In Debt Capital Markets, the division facilitated several landmark Sukuk issuances, including Prasarana Malaysia Berhad’s RM1.4 billion Sukuk under its RM17 billion Sukuk Murabahah BUSINESS SEGMENTAL REVIEW Stockbroking Asset and Wealth Management Investment Banking Awards 2024, further solidifying its leadership in the sector. Complementing the division’s performance, Rakuten Trade Sdn Bhd, the Group’s joint venture partnership with Rakuten Securities Inc., sustained its growth trajectory with Assets Under Administration reaching RM4.6 billion by December 2024—a 12% year-on-year increase. It also maintained a 5.5% share of the retail market, reinforcing its role in Malaysia’s digital investment landscape. Its contribution to fintech-driven investing were recognised with the DigiTech Awards 2024 for Fintech-Digital Investments & Trading Solutions, underscoring its impact on the evolution of online trading solutions. The division’s commitment to excellence was also recognised when it received the Best Retail Equities Participating Organisation (Investment Bank) (Champion), Best Structured Warrants Issuer (Equity Warrants) (Champion) and Best Structured Warrants Issuer (Index Warrants) (Champion) awards from Bursa Malaysia, reflecting its consistent industry leadership. Building on this momentum, the division remains focused on strengthening its retail presence by introducing innovative investment solutions, such as algorithmic trading platforms. Enhanced marketing strategies will continue to drive product awareness and engagement, further solidifying its market leadership in a competitive brokerage landscape. Programme, which was oversubscribed by 1.8 times. It also managed Berjaya Yokohama Sdn Bhd’s RM1 billion Sukuk programme for overseas expansion and structured financing solutions such as the RM100 million Wira Pertiwi Sdn Bhd’s Sukuk programme, backed by Istana Negara’s facilities management concession, and the RM200 million asset-backed securities programme under Qiradh Capital Sdn Bhd. Its Islamic Markets team further strengthened its leadership in Shariahcompliant finance, advising on Islamic funds and integrating ESG principles into Islamic investment frameworks. On the Corporate Banking front, the division’s loan book grew to RM707.2 million by year-end. Despite compressed net interest margins due to competitive funding costs, it remained focused on structuring tailored financial solutions to meet client needs. Furthermore, Group Treasury delivered an exceptional turnaround, achieving a PBT of RM3.7 million, a sharp recovery from the RM1.8 million loss recorded the previous year. This was driven by stronger trading income and improved profitability from the foreign exchange business. Fixed income securities business also performed well, supported by Bank Negara Malaysia’s accommodative stance and stable Overnight Policy Rate (“OPR”). Moving forward, Group Treasury will continue diversifying its product portfolio and refining its strategy to build a more consistent and stable income stream. With a strong foundation across Corporate Finance, Debt Capital Markets, Corporate Banking, and Treasury, the division remains focused on delivering innovative financial solutions, deepening client relationships, and strengthening Malaysia’s capital markets with agility and expertise. Another key addition was the Kenanga Alternative Series: Islamic Global Responsible Strategies Fund, which provides exposure to Shariah-compliant global equities by leveraging AI-driven investment strategies. Meanwhile, the Kenanga Alternative Series: Strategic (SEA) Fund was introduced as a close-ended fund, to provide capital growth to high-net-worth investors over the medium term. The fund will invest regionally in equities and equityrelated securities of companies that have established leadership positions in the financial technology space and are on a path towards readiness for an IPO or merger and acquisition event. KIG also continued to expand its presence in the ETF market through Eq8 Capital, which unveiled a new corporate identity and enhanced access to EQ8US50, its best-performing ETF. A major milestone was the listing of the world’s first Waqf-featured ETF, the Eq8 FTSE Malaysia Enhanced Dividend Waqf ETF, on Bursa Malaysia, reflecting its commitment to innovation in socially responsible investing. The Waqf ETF aims to distribute income annually with half of the income distribution to be allocated as Waqf assets and the remaining half payable to unitholders. In recognition of its efforts, Eq8 Capital clinched the Special Award – Thought Leadership at the Bursa Malaysia Excellence Awards 2024. In 2024, KIG expanded into legacy planning with the launch of KTB and its Kenanga Will Series, as well as Kenanga Wasiat Series, simplifying estate planning for clients across different financial backgrounds. Meanwhile, Private Client Advisory Service continued to offer tailored wealth management solutions for high-net-worth individuals, reinforcing KIG’s role as a trusted partner in succession and estate planning across different segments of the Malaysian population. GROUP MANAGING DIRECTOR’S MANAGEMENT, DISCUSSION AND ANALYSIS GROUP MANAGING DIRECTOR’S MANAGEMENT, DISCUSSION AND ANALYSIS
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