A recap of the Investor Relations Magazine Asia Awards 2002
To be perfectly fair, when people think of Asian markets, excellence in the fields of investor relations, corporate governance and transparency are not likely to spring to mind. Investors, in particular, are more likely to remember the various crises that have afflicted markets and currencies in the region in recent years, and the difficulties they sometimes experience when trying to get any information from Asian companies.
It is a region where eminent families jealously defend their control of the companies founded by their ancestors, notwithstanding the fact that these companies have been publicly listed for some time. In spite of pressure from some investors, many companies are still openly hostile to transparency, and even numerous CFOs from the top companies in the region will admit that the prominence of family-owned businesses is an obstacle when it comes to good corporate governance.
And yet against this adverse backdrop, numerous companies in the Asia-Pacific region have distinguished themselves for their openness with investors, analysts and customers alike, for their avant-garde attitude to corporate governance, and for the honesty and clarity of their corporate communications. The Investor Relations Magazine Asia Awards, held in Hong Kong in November, attempted to identify these companies and honor them for their efforts in the field of IR.
To identify the award-winners, Taylor Nelson Sofres Group Hong Kong, a leading market research group in Asia, conducted 563 telephone interviews in ten Asian countries during August and September 2002. The fund managers and analysts interviewed overwhelmingly identified a distinct improvement in the quality of IR in the Asia region over the past year, with 76 percent saying it had improved and just 11 percent saying it had declined.
Singapore star
The star of the show was undoubtedly Singapore Airlines, which walked off with several awards including the grand prix for best overall IR. According to one interviewee, 'Singapore Airlines provides timely information and is open to investors. The company holds meetings with investors to explain any new direction it is taking, and any operational aspects.'
Singapore Airlines also picked up the awards for best annual report, best communication of shareholder value (an award it shared with Samsung Electronics of Korea) and, in the wake of September 11, for best crisis management. No surprise, then, that the company also won the award for best IR by a Singaporean company. Investors were particularly impressed by its ability to respond to the September 11 crisis, whose effect was so harshly felt by the airline industry. 'They responded very well to the sudden drop in traveling,' said one survey respondent. 'They stayed very focused on trimming costs and still being profitable.'
The grand prix for best overall IR by a small or medium-sized company went to Hong Kong-based Techtronic Industries. One respondent explains: 'It has good disclosure and provides a quick response to issues and questions raised by investors and analysts.' Another adds, 'The company is eager to meet analysts and has regular reporting to fund managers. Presentations made by the company are also very detailed.' Techtronic is listed in Hong Kong but also has a level one ADR in New York. Over 80 percent of the shares are held by institutional investors, to whom it reports on a half-yearly basis. Although last year the company organized a 'worldwide trip,' 'this year we're breaking it down into several roadshows, having been to Europe and to the east and west coast of the US so far,' explains Judy Fung, Techtronic's associate director, IR and communications.
Fung says it's easier for Techtronic to market its stock in the US than in Asia or Europe. 'Our main products are power tools and only US investors are aware of why they need these tools, and why we can grow so fast,' she explains. 'In Asia we come across the question Why do customers need power tools? They think it's only a lifetime investment, something you need only every 20 years. Lots of investors can't visualize the growth in this sector because in the East we don't use these products so much.'
Fung adds that in Europe investors also prefer to wait and see what happens: 'We see it in the reaction to our roadshows. We go there and see our share price has some performance, some buy orders. But it's more effective if we go to the US.'
Flying high
Coincidentally, the individual identified as best IRO also hails from the airline industry: Tony Tyler of Hong Kong-based Cathay Pacific was described as someone who 'is accessible, makes frank comments and has strong overall knowledge.' Tyler himself seems bemused to win the award, especially 'in the year when Rob [Atkinson, Cathay's finance director] and I decided we would stop doing one-on-one briefings to analysts.' In his own favor, Tyler adds, 'I try to tell investors as much as I legally can when I talk to them, and answer their questions openly and honestly.'
Also prominent at the awards ceremony was another Singapore-based company, DBS Group Holdings, which received the prizes for best financial advertising and best use of the internet for investor relations, as well as racking up six second placings in the main awards list. Tony Raza, head of IR at the banking group and formerly a banking analyst at Prudential Bache, explains: 'Over the last two or three years DBS has tried to emphasize IR more substantially than in the past.'
Raza admits the last year has been particularly difficult for DBS, all the more so because of the challenging macroeconomic environment. Indeed, he says, some recent projects, such as the 2001 purchase of Hong Kong's Dao Heng Bank, have put pressure on the company's share price. 'Investors have been asking some difficult questions, but throughout management has tried hard to be open and accessible,' Raza affirms. 'In some ways getting the award in these challenging times is very satisfying - it proves it's worth the effort to remain accessible.'
In difficult times
Despite the macroeconomic struggles of last year, there are companies that have managed to expand and at the same time keep the investment community well informed. This combination of factors gained the Tom Group - listed on the Growth Enterprise Market - the award for best IR by a growth market company. 'It is very ambitious in takeovers and has transformed itself from an internet company to a media company,' said one respondent. 'Every time there is an acquisition, the data and information released are good.'
Rachel Chan, general manager of corporate communications at Tom, explains the role played by IR during the execution of the acquisition strategy: 'The IR function served not only as a communications gateway to describe more about the inner workings of the transformation, but also as a feedback process. It kept management and the rest of the company up-to-date with the market/investor responses to those transactions, and with what investors expected to see more of in terms of information disclosure and general transparency of the nature of operations post-acquisitions and how the integration of those new businesses were progressing.'
The benchmark has been set by those companies rewarded by Investor Relations Magazine Awards at the ceremony celebrated in Hong Kong. Now Asian companies only need to push it upwards.
Click here to see the winners