Holdings Update
Dhanam Prabawa Holdings issues selective updates on portfolio exposures and sectoral dynamics. These notes are not performance communications but structured observations on how individual holdings and sectors interact with shifting economic, market, and policy conditions. They emphasize earnings momentum, structural positioning, and resilience, offering clarity on the drivers underpinning capital allocation.
Holdings Updates are differentiated from Dhanam’s Quarterly Performance Reports, which review aggregate portfolio outcomes, and from Investment Rationale papers, which establish long-term thematic convictions. Instead, they provide timely assessments of specific allocations, reflecting how the firm’s strategy adjusts within evolving contexts while remaining grounded in its mandate: capital preservation, steady compounding, and structural foresight.
2025
Holdings Update – Dhanam Malaysian Banking Investments For Informational Purposes Only Dhanam’s exposure to Malaysian banking reflects a conviction that well-capitalized, dividend-generating financial institutions are core anchors for long-term portfolio resilience. The recent earnings report from a leading financial services group in Malaysia underscores the structural strength of domestic banks as they balance commercial lending, wealth management, and insurance services within a diversified ecosystem. For Dhanam, such results validate its thesis that Malaysian banks, when prudently governed and diversified, are capable of compounding value across cycles while sustaining predictable cash distributions. Analysis In the most recent fiscal year, Malaysian banks delivered record-high earnings, with net profit growth driven primarily by commercial banking and insurance subsidiaries. Net interest income continued to expand steadily, reflecting healthy loan growth and stable funding costs, while non-interest income surged on wealth management, treasury, and foreign exchange gains. This dual-engine growth reaffirms Dhanam’s investment framework: the ability of banks to withstand interest rate volatility through diversified income streams. Insurance subsidiaries also contributed meaningfully, with double-digit growth in family takaful and overseas operations. General insurance units in Singapore and Hong Kong nearly doubled profits, demonstrating the regional scalability of Malaysian financial institutions. Such geographic and sectoral diversification aligns closely with Dhanam’s preference for businesses that operate beyond narrow domestic cycles and embed multiple earnings levers within their models. Dividend distributions were robust, with total payouts rising materially year-on-year. For Dhanam, the sustainability of dividends—backed by strong capital adequacy and disciplined cost management—represents not just a cash flow advantage, but a marker of corporate governance quality. This affirms our policy preference for institutions with consistent, long-term dividend histories. Strategic Rationale From Dhanam’s macro-to-micro perspective, Malaysian banks are positioned at the intersection of domestic consumption growth, regional capital flows, and the long-term deepening of ASEAN financial markets. Earnings growth, coupled with higher payouts, signals enduring balance sheet strength and risk management discipline. This sector offers a unique blend of income stability, capital preservation, and structural growth—making it integral to Dhanam’s core financial services allocation. Looking ahead, challenges such as interest margin compression and geopolitical volatility remain. However, banks with diversified ecosystems—spanning retail banking, investment services, and insurance—are structurally advantaged to mitigate downside pressures. For Dhanam, these dynamics reinforce confidence in holding and scaling allocations within the Malaysian financial services landscape.
Holdings Update – Dhanam Upstream Energy Investments Date: September 3, 2025 Prepared by the Office of the Chief Investment Officer Executive Summary Amid persistent macroeconomic headwinds, including elevated trade tensions and softening global demand, oil prices continue to face downward pressure. Brent crude has declined 25% from its January 2025 peak, reflecting broader uncertainties in trade policy and inflation management. Drawing on J.P. Morgan Research’s latest projections, we anticipate Brent averaging $66 per barrel (bbl) in 2025 and $58/bbl in 2026, driven by oversupply risks and revised lower demand growth. These dynamics underscore a bearish outlook for upstream energy assets, yet they also present opportunities for consumer relief and strategic portfolio repositioning. For Dhanam Prabawa Holdings, this environment amplifies risks in concentrated upstream exposures but highlights resilience in diversified, cost-efficient operations. We recommend modest allocation shifts toward midstream and renewables to mitigate volatility while preserving long-term value. Market Outlook The oil market remains in a delicate balance, with supply outpacing demand amid de-escalating but unresolved U.S. trade disputes. J.P. Morgan Research maintains its April forecast of Brent at $66/bbl for 2025 and $58/bbl for 2026, even as recent policy shifts—from tariffs to deregulation—offer limited upside. Brent’s 25% drop since January reflects investor caution, though optimism around a “Trump put” (presidential intervention to stabilize markets) has tempered further declines. Key drivers include a downward revision in global oil demand growth to 800 thousand barrels per day (kbd) in 2025, a 300 kbd reduction from prior estimates, due to soft economic activity and potential underestimation of final tariff impacts on U.S. imports. This bearish tilt suggests prices may stabilize in the low $60s short-term but trend lower into 2026, heightening the risk of a market reset. OPEC & Supply Dynamics Supply-side pressures are intensifying, with OPEC set to increase crude production by 411,000 barrels per day in June 2025 to enforce quota adherence among members. This shift in OPEC’s reaction function—prioritizing volume over price support—poses a more significant bearish factor than demand weakness alone. Several members are ramping up capacity: the UAE anticipates 200 kbd annual increments in 2025-2026 across fields like Upper Zakum and Bu Hasa; Kazakhstan has added nearly 200 kbd at Tengiz; Iraq is enhancing refining in Kirkuk and Basra; and Kuwait is modestly expanding in the Light Jurassic Formation, with Saudi-Kuwaiti Neutral Zone output up 40 kbd in 2025. Critically, major international oil companies are funding over $10 billion annually into Middle East upstream from 2025-2027, diminishing the price impact of supply cuts (from $10/bbl in 2023 to $4/bbl in 2025). For oil-producing nations, maximizing revenue through higher volumes may prove optimal, increasing the likelihood of oversupply and a structural price reset between 2025 and 2026. Policy & Macro U.S. policy continues to favour lower oil prices as a tool for inflation control, with the Trump administration targeting crude below $50/bbl to ease consumer burdens. Recent de-escalation in trade talks reduces bear-case probabilities but does not alter the focus on energy affordability. A sustained oil price decline could subtract 1.5 percentage points from global CPI this quarter, as seen in March 2025 when energy inflation slowed headline CPI to 2.6% on a three-month annualized basis (down from 4.5% in January). This cushioning effect supports U.S. household consumption amid tariff pressures, potentially smoothing a purchasing power squeeze. Globally, trade tensions exacerbate demand softness, while fiscal stimulus remains muted. Intervention to prop prices is unlikely unless WTI falls below $50/bbl, where U.S. shale output declines, aligning with broader goals of deregulation and tax relief over tariff reversals. Portfolio Implications Dhanam Prabawa’s upstream energy holdings, comprising 18% of total assets under management, face elevated risks from this bearish outlook, including margin compression and reduced cash flows in high-cost operations. Key exposures in Middle East and North American shale assets are vulnerable to oversupply, though low-breakeven producers (e.g., those below $45/bbl) demonstrate resilience. We assess a potential 10-15% valuation downside in 2025 if prices align with forecasts, offset by hedging strategies covering 40% of production. To enhance stability, we propose reducing upstream allocation by 3-5% in favor of midstream infrastructure (e.g., pipelines with stable fee-based revenues) and selective renewables integration. This adjustment bolsters downside protection while capturing any consumer-driven economic rebound, maintaining overall portfolio yield at 6-7%. CIO Statement "In this environment of subdued oil prices and supply abundance, Dhanam Prabawa’s proprietary capital strategy must prioritize agility and diversification to safeguard long-term positioning. While upstream investments remain core to our high-conviction energy thesis, the projected decline to $58/bbl Brent in 2026 signals a pivot toward value preservation over aggressive growth. By leaning into resilient, low-cost assets and reallocating toward transitional energy plays, we can navigate near-term volatility and emerge stronger in a post-reset market. This approach aligns with our commitment to sustainable returns, ensuring our private capital is deployed with discipline amid evolving global dynamics."
Holdings Update – Japanese Banking Sector Expansion Date: September 5, 2025 Prepared by the Office of the Chief Investment Officer Dhanam Prabawa Holdings has expanded its direct equity ownership in the Japanese banking sector, reinforcing the firm’s exposure to systemically significant institutions. This step reflects Dhanam’s conviction in the resilience of diversified banking models in developed economies, particularly those combining domestic credit stability with global financial intermediation. Selected institutions in this allocation exhibit strong balance sheets, disciplined risk management, and sustainable income generation. This expansion aligns with Dhanam’s philosophy of anchoring capital in institutions that combine scale, systemic relevance, and consistent returns. Through targeted expansion in Japan’s banking sector, Dhanam continues to position its portfolio in alignment with enduring macroeconomic trends in Asia while maintaining its identity as a long-term steward of proprietary capital.
Holdings Update – New Allocation in Regulated Financing Structures Dhanam is pleased to announce a new allocation into regulated financing structures that expand our participation in the global private credit market. This allocation reflects our conviction that private credit represents a structural and enduring asset class, driven by the retreat of banks from middle-market lending, the rising demand for non-bank financing, and the attractive income premium available to disciplined capital providers. Unlike pooled fund vehicles or listed BDCs, these regulated structures channel capital directly to underserved middle-market and SME borrowers through frameworks licensed and supervised by financial regulators. By participating in these opportunities, Dhanam broadens its credit exposure to an essential segment of the economy that remains underpenetrated by traditional banking institutions. This allocation is not a departure from our institutional orientation but a strategic complement. Together with our exposures to institutional-grade private credit funds and BDCs, it enhances diversification, balances liquidity with direct credit participation, and strengthens the resilience of our income strategy across rate cycles and geopolitical regimes. Equally important, this initiative positions Dhanam to steadily build internal capability and operational familiarity with direct lending structures. It is a deliberate step in our long-term roadmap towards larger, bespoke private credit transactions — where proprietary capital can be deployed with greater control, scalability, and strategic influence. This combined approach demonstrates Dhanam’s commitment to delivering sustainable yield, disciplined credit selection, and long-term value creation for our private shareholders.
Holdings Update Disclaimer
The information contained in this Holdings Update is provided solely for informational purposes and reflects Dhanam Prabawa Holdings’ proprietary perspective on its portfolio exposures at the time of publication. These updates are selective in nature and intended as timely expressions of thought leadership on sectors and themes of strategic relevance. Dhanam Prabawa Holdings does not, and will not, disclose the specific companies it owns or invests in. This communication does not constitute an offer, solicitation, or recommendation to buy or sell any security, financial instrument, or investment product. No part of this update should be construed as financial advice, nor does it establish any advisory, fiduciary, or client relationship with Dhanam Prabawa Holdings. All statements, views, and forward-looking assessments are based on sources believed to be reliable but are not guaranteed for accuracy or completeness. Past performance is not indicative of future results, and future outcomes may differ materially from the views expressed. Dhanam Prabawa Holdings is a private investment holding company that manages only private capital. It does not accept external funds, provide portfolio management services, or engage in public fundraising activities. Unauthorized reproduction, distribution, or reliance on this communication is strictly prohibited.