What do investors want to see from a company going through a crisis? Vijay Natarajan, an equity research analyst and regular judge at the IR Magazine Awards – South East Asia, says a good case study to look at is PTT.
The state-owned oil and gas giant, Thailand’s second-largest company by market cap, has faced a long list of challenges over the last four years, ranging from the impact of Covid to recession, geopolitical volatility and pressure to shift into greener industries.
In addition, due to its majority government ownership and central role in providing energy security to the Thai public, it has needed to carefully balance its priorities across different stakeholders.
Despite these competing pressures, the company has kept up effective engagement with the investment community, according to the judges at the IR Magazine Awards – South East Asia 2023, who placed it first for best crisis management.
‘It has [been] transparent and [acted] as a bridge to narrow the information gap between the company and the market,’ says Natarajan.
‘Perfect storm’
PTT’s submission for best crisis management highlights the various upheavals it faced in recent years. The pandemic combined with ‘both macro and micro factors, such as recession, geopolitical tensions and environmental concerns’ to create the ‘perfect storm,’ writes the company in its awards submission.
Throughout this period, PTT needed to demonstrate its ‘financial strength’ to investors, notes the entry, while also convincing them about the value of new business areas it was entering, such as electric vehicles, batteries and nutrition.
‘Additionally, among energy conglomerates, PTT is unique as it is both a listed company with shareholders that want to maximize profit, and a state-owned enterprise handling the energy security of Thailand,’ continues the submission. ‘IR has a key role to communicate and convey the right message at the right time… to maintain investors’ confidence and reflect the true and fair value of the company.’
To keep investors onside, PTT says it focused on some key principles, such as responding effectively to market queries, using feedback to adjust corporate strategy, working closely with management on messaging and keeping up direct contact through a variety of channels.
The conglomerate also took steps to reaffirm its value proposition, with a series of educational events covering both its overall group – which contains several large subsidiaries – and new business areas. On the latter, exhibitions and site visits helped to bring the new products and services to life.
Crisis response
What made PTT’s entry stand out to the judges? Natarajan says good crisis management requires clearly understanding the problem, identifying the impacted stakeholders and then crafting the right message – all areas PTT tackled effectively.
Companies must also be ‘transparent, honest and open’ during crisis periods, says Natarajan. ‘Again, that’s something [PTT] has been able to do well.’
Crucially, he says companies need to understand where there are gaps in market knowledge and work quickly to fill them in.
‘Is the market misunderstanding the crisis?’ he asks. ‘Sometimes the impact of a crisis could be marginal or net-nothing. But the market could be perceiving it in a different manner and that could impact the share price much more negatively.
‘That is a gap IR can fill … And that is specifically what PTT did well. There were issues that were not fully understood. It has… come out with a pitch that mitigates and minimizes the gap.’
The IR Magazine Forum & Awards – South East Asia 2024 will take place on November 29 in Singapore. To find out more or book your place, please click here.
