Precious Shipping's first-rate IR

Precious Shipping won best investor relations in the Singapore market by a Thai company at last December's IR Magazine South East Asia Awards 2011. Below, managing director Khalid Hashim discusses his IR program.

How would you describe the IR philosophy at Precious Shipping in three words?

Just do it. You have to be right in front of investors, in their faces in order to get your message across.

Why do you think it is important to meet with investors?

If you are a company and you don’t want to invest your time in IR, you should not be a public company. It defeats the purpose. If you want to be a public company, you absolutely have to focus on IR.

There are a couple of reasons why we are more focused on IR than many of the other companies around. First, it is because we feel IR is like a spotlight. Let’s say you have a diamond and you keep it in a black box inside a vault and hide it away.

It will still have its intrinsic value because it is a diamond, but it will never have the value it would have if it were put under the spotlight, say at a Sotheby’s auction.

IR is like a spotlight or that auction: it is the way you get the best value for your company.

Second, we focus so much on IR because we have very large shareholdings that are closely held and do not trade. Approximately 60 percent of the company is held by three different entities.

One is the founder family that brought in the funds to start Precious Shipping, the Shah family. It has about 43 percent. Then there is my younger brother and myself who equally share about 17.5 percent between us.

Those three entities don’t trade so the free float in the company is rather small.

This remaining 40 percent is mainly held by institutional shareholders, but because of the way we run the company they really don’t trade that much either, so our daily trading volume is pretty small.

The issue with small trading volumes is that if you don’t have enough investor focus and attention on your company, the volume will keep getting lower and lower and – frankly – the valuation of the company suffers, because even a small amount of movement can either push the price up or down quite significantly.

By constantly being on the road, we have got trading volumes up to a healthy, respectable level, so any sudden sharp upward or downward movement – when a big buyer or seller appears – does not happen with our stock.

Now, the major shareholders don’t really care whether the price goes up or down, in that sense, because they are not buyers or sellers.

So why my focus on IR? It is because the smaller shareholders should get the same break as if there were no major shareholders.

To do that, to be fair to the smaller guys, you have to make sure their interests are looked after rather than worry about the big guys.

How often do you meet with investors?

Very frequently. I’m on the road maybe 12-18 times a year at various roadshows, investor conferences, shipping conferences, non-deal roadshows: you name it, I do it all.

Who goes on the road with you and where do you go?

I do it alone. Nobody comes with me. I go fairly frequently to Singapore, Hong Kong, continental Europe and the UK, in that order. America is about once every two years.

Are you doing more investor meetings this year than in 2010?

Ours is a very busy calendar and a very busy schedule. It never stops. This year it has been at roughly the same level as we have been performing at on the IR side for the last five, six or seven years; maybe even 10 years.

How do you manage to do fit in that IR schedule when other CEOs struggle?

It depends on how much of an active role you play in terms of running the company. If you have a good team running the company, you can focus a lot on the IR side.

Plus, many principals who own these companies are also the MDs of the firm and think it is undignified or beneath them to handle IR.

Why don’t you use that excuse, given that you also have a significant shareholding in the company?

I have very competent people working for me and they run all the vertical silos that are there in the organization, and they run them very well. I don’t need to look into that. If there’s a problem, they discuss it with me but that is about it.

What types of investors do you meet with?

You get all sorts. We get some fund managers who always want to meet with me no matter how often I am in town. There are others who sleep through the meetings – I guess they are tired or maybe I’m boring or what I’m saying doesn’t interest them.

Then there are those who are completely focused. They come in with a list of questions and you don’t have to waste any time.

They know exactly what they want from you and what questions they want to ask. Those are the really smart guys. They prepare themselves before the meeting.

What sort of questions are investors asking at the moment?

They use my knowledge of the industry not only to decide whether they should invest in our company but also in our sector or in other sectors within the shipping market.

Let me give you two companies as an example: one of them is the Government of Singapore Investment Corporation (GIC), which is an investor in Precious Shipping.

GIC hardly ever meets with us. It holds our shares and there is no change in its holding. Once every two or three years it will call for a meeting with management.

Otherwise it is very happy with our disclosure, which we keep putting up on our website, as well as emailing the relevant officers who are looking after the investment in our company.

The other one is Temasek. Temasek is not an investor. It tells me clearly, ‘We cannot invest in your company: your liquidity, profile and so on don’t suit us.’

Yet it always wants to meet with me because it wants to understand what is going on in the shipping industry more generally.

Every time I am in Singapore it will want to meet with me to get an unbiased, frank and informed opinion from an industry insider who has the knowledge.

The only thing you have to very careful of is that people don’t get the impression that you know everything.

Why do you meet with Temasek when you know it won’t invest?

This is the difference between good IR and poor IR. In good IR, you don’t question the motive of the investor that wants to meet with you.

You don’t question whether it is rich or poor, if it is a big investor or a small investor; whether it is a current investor or will be a potential future investor.

You just meet the investor as if it is your best investor and talk to it like that. Then, who knows? In the future, it might become an investor.

Do you get any return on meeting with these investors?

We tell brokers that take us on road that feedback is the breakfast of champions.

Therefore we need feedback from investors as to what they think about the presentation: was there something lacking, was there something they wanted more of or something less of? And I always follow it up with an email.

My meetings with investors always run out of time. It is almost impossible to explain to someone in one hour something I’ve spent my whole life in and still don’t understand fully, so we always have to leave while there’s someone coming down to the door to ask the last question just before we get into the car.

I always tell that person that if he or she has any further follow-up to feel free to give me a call, because I’m quite happy to chat with him/her.

It’s a question of how much effort you are willing to put in. It might seem very glamorous to be traveling all over the world and meeting with investors, spending a day in one city, spending the next day in another, but it is extremely tiring.

When you spend a day having six to eight meetings, talking non-stop for eight to 10 hours, it is really tiring.

But you cannot show less enthusiasm toward the end of the day and more enthusiasm at the beginning. You have to show the same level of enthusiasm throughout the day.

This interview originally appeared in IR magazine's Investor Perception Study, Asia 2011/2012.