Like many companies around the world, Temasek Holdings was not spared from the impact brought by the Covid-19 pandemic. It recorded a preliminary total shareholder return (TSR) of –2.3% for the financial year ended March 31, compared to 1.5% last year. Its preliminary net portfolio value (NPV) also fell 2.2% y-o-y to $306 billion from $313 billion a year ago.

However, the Singapore state-owned investment company’s weak performance was not entirely disappointing. Temasek says it ended the year in a net cash position with a strong balance sheet. It also points out that its preliminary TSR was still comparatively better against certain benchmarks that saw a “sharp market correction” in the quarter ended March 31.

In particular, the MSCI Singapore Index and MSCI AC Asia ex-Japan Index declined 18.3% and 9.0%, respectively, during the year. Globally, the MSCI World Index declined 5.8%. This is despite the investment company’s emphasis that it does not benchmark against public market indices or the returns of other companies.

The weak numbers for the last full year ended March 31 also did not affect Temasek’s performance too badly in the longer term. Over a 16-year period starting in 2004, Temasek managed to record a compounded TSR of 7.5%. Since its inception in 1974, the compounded TSR remains at 14%. Its NPV has trebled over 16 years, up from $90 billion as at March 31, 2004. “As was evidenced during the SARS epidemic and the Global Financial Crisis, Temasek typically outperforms market indices during the market downturns,” it says.

Still, Temasek’s results are only preliminary. The investment company typically reports its annual results in July. But owing to the Covid-19 pandemic, that has been delayed to September, says chief executive Ho Ching in a Facebook post on July 2.

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According to Temasek, the preliminary portfolio performance is based on unaudited consolidated financial statements during the year. This is due to delays in receipt of the audited results of companies and associates in its portfolio. Many of its portfolio companies have postponed the reporting of their results as a result of disruption brought by various measures to curb the pandemic across the globe. This included lockdowns, the circuit breaker measures in Singapore, and other business and community restrictions.

Temasek says the audit of the group consolidated financials and portfolio data is expected to be finalised in September. It does not expect the final portfolio performance to be “materially different” from the preliminary portfolio performance.

Dilhan Pillay, CEO of Temasek International, says he is not too worried about the investment company’s performance this year, despite some impairments made. “On the whole, we are pleased with our performance, despite the sharp correction due to Covid-19. We have a good mix of listed and unlisted investments, a good balance between our portfolio stalwarts, and our new investments into emerging and longer-term trends. These help to add to our resilience,” he says.

For instance, the unlisted-port operator PSA continued to provide “steady returns” even as it prepared “actively” for future challenges like the hydrogen economy and other longer-term changes, Pillay points out. “We continue to work with our portfolio companies to ride out this crisis, building up their resilience and repositioning them to emerge stronger in the post Covid-19 world,” he says.

That said, Temasek has its work cut out ahead given that it has taken a more active role in its portfolio companies. For example, it led the $15 billion rescue of Singapore Airlines (SIA) in March. Ho explains that it was more than helping the airline “tide over the cashflow crush of Covid-19”. “Both the SIA and Temasek teams know clearly, the Temasek support is to provide the foundation for SIA to emerge stronger and better,” she said in the same Facebook post.

Temasek is also in the midst of helping Sembcorp Industries and Sembcorp Marine (SembMarine) restructure and raise funds. Last month, the two companies proposed the recapitalisation of Sembmarine through a $2.1 billion renounceable rights issue, of which $600 million will be subscribed by Temasek.

This is to be followed by a proposed demerger of the two companies via a distribution in specie of Sembcorp’s stake in the recapitalised Sembmarine to Sembcorp shareholders. As a result, Temasek could emerge as the biggest shareholder in Sembmarine, with a stake of between 29.9% and 58%.

Moreover, it is making a partial offer to gain greater control of Keppel Corp, though there are recent reports suggesting this is under review, with the determination partly dependent on Keppel’s upcoming 1HFY2020 results, out on July 30.

Ho also says Temasek is trying to beef up its own balance sheet further amid this bigger than expected downturn caused by Covid-19. “This has come in handy as we work through the Covid crisis that is threatening to bring on a global recession,” she adds.