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Dynamic Investor Relations Management Through Global Financial Crisis By Haikuan Lu (Dennis) IR Magazine Hong Kong and Taiwan Conference & Awards 2009 December 15, 2009
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Content
[object Object],[object Object],[object Object],[object Object],[object Object],Matrix for Successful Investor Relations Programs
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Challenges of Most Small & Mid Caps Vs. Large Caps
S&P 500, Hang Seng and NASDAQ index from May 2007 to December 2009 In-Crisis: What proactive IR initiatives? Pre-crisis: Planning? In or Post Crisis? Another cycle? ? Worsening Scenarios amidst Financial Crisis
Dynamic Investor Relations Management
Assessment to Find Problems (SWOT) Strength: Right Industry, right People, right Story Established leadership in niche markets Solid base of institutional investors Senior management’s IR commitment  Weakness: Fewer equity analyst coverage Little financial media attention  Fewer exposures of CEO at industry forums and in media Lower liquidity and fewer retail investors  Opportunities: Changed landscape of fund inflows Increasing interests in healthcare industry from overseas and domestic investors Re-rating of public firms Increasing QDIIs  Increasing domestic retail investors  Threats: Inconsistent corporate vision and mission Poor corporate governance  Growth strategy does not work out
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Nail down Prior Challenges to Address
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Plan & Execution:
Enhance Visibility via Sell-side Analysts: Bottom up or Top down? Comments: This is more than building up a working relationship or partnership - Speak with analysts with their languages, quantitative and qualitative, and more; make analysts visits as productive as possible Investment Banks Interests in Small and Mid Caps Initiation Tier 1  Depends Boutique & Tier 2 Likely Chinese I-banks Very likely  Regional and Niche Players Very likely
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Media Affinity Through Special Corporate Events
[object Object],[object Object],[object Object],[object Object],Targeted Marketing to QDIIs and Active Investors
[object Object],[object Object],[object Object],[object Object],[object Object],Targeting Criteria and Know whom You are Talking to
[object Object],[object Object],[object Object],[object Object],Communicating “Your Stories” Creatively to Buy-sides
[object Object],[object Object],[object Object],[object Object],Give Right Answers to “Tough” Questions!
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Control
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Summary of Results Achieved
[object Object]

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Dynamic Investor Relations Management Through Global Financial Crisis

  • 1. Dynamic Investor Relations Management Through Global Financial Crisis By Haikuan Lu (Dennis) IR Magazine Hong Kong and Taiwan Conference & Awards 2009 December 15, 2009
  • 2.
  • 3.
  • 4.
  • 5. S&P 500, Hang Seng and NASDAQ index from May 2007 to December 2009 In-Crisis: What proactive IR initiatives? Pre-crisis: Planning? In or Post Crisis? Another cycle? ? Worsening Scenarios amidst Financial Crisis
  • 7. Assessment to Find Problems (SWOT) Strength: Right Industry, right People, right Story Established leadership in niche markets Solid base of institutional investors Senior management’s IR commitment Weakness: Fewer equity analyst coverage Little financial media attention Fewer exposures of CEO at industry forums and in media Lower liquidity and fewer retail investors Opportunities: Changed landscape of fund inflows Increasing interests in healthcare industry from overseas and domestic investors Re-rating of public firms Increasing QDIIs Increasing domestic retail investors Threats: Inconsistent corporate vision and mission Poor corporate governance Growth strategy does not work out
  • 8.
  • 9.
  • 10. Enhance Visibility via Sell-side Analysts: Bottom up or Top down? Comments: This is more than building up a working relationship or partnership - Speak with analysts with their languages, quantitative and qualitative, and more; make analysts visits as productive as possible Investment Banks Interests in Small and Mid Caps Initiation Tier 1 Depends Boutique & Tier 2 Likely Chinese I-banks Very likely Regional and Niche Players Very likely
  • 11.
  • 12.
  • 13.
  • 14.
  • 15.
  • 16.
  • 17.
  • 18.

Editor's Notes

  1. Different companies are incorporated with different people and different products, and have different elements. They have different investment stories to tell the financial community. However, the investor relations functions among public firms do share some common goal, such as fair value of company stock, lower cost of capital, reasonable liquidity, optimal shareholder mix and having supporters and believers. The most essential part is to compete for capital!
  2. Though the goals and priorities of IR are set for investor relations directors, mid and small-cap companies have to take different approaches. Large cap companies are in a more favorable position than small and mid caps to attract the attention of sell-side analysts and buy side PMs. To compete for attentions, small and mid caps have to pay attention to how to communicate with all stake holders, internal and external. Budget is limited as well.
  3. I am not a chartist. But the global financial crisis starting makes it more challenging for small and mid caps. Through the financial storms, we saw contracted sell-side institutions, two big names were ousted. Many buy-side institutions were under the pressure of liquidation. Investor relations directors found their stock prices tumbled, and their shareholder mix remain volatile. People are skeptical with their companies’ stories, no matter there is guidance or not. Like many others, I am not in a position to predict when a crisis will arrive or not. However, to make it more your IR strategies work, you need to revisit your IR fundamentals from time to time. The capital market is dynamic, so you need to adopt a dynamic IR strategy as well.
  4. Here is what approaches I adopted. Since the capital market keeps change everyday. We can keep monitoring the situations of the capital market, and adjust or repair our IR approaches. After assessing the situation to find problems, we need to plan well and takes proper actions to address the challenges. Execution is very important, and control is necessary to ensure an optimal outcome. This is a continuous process in line with capital market changes from time to time. IR directors should keep vigilant always.
  5. I started to look into our IR practices in early February, and do a SWOT analysis before taking actions: here is what I found: Strength Weakness: Opportunities: Threats: Through this process, I also interviewed some fund managers, and look into industry peers’ shareholder structure. Perception studies will help through process if you have more funds available.
  6. Next is to do a checklist and list out the prior action items down the road.
  7. Harmonize relationships with Tier-one investment banks Enhance relationship with boutique Tier 2 banks Solidify working relationship with leading Chinese investment banks who understand your stories better and have easier access to QDII fund managers Attention to smaller I-banks that are strong in niche segments such as retail investors or high-net-worth individuals
  8. Guidance or not? Depends Operating Return on Assets Cash Flow ROI Reinvestment Strategy/Returns Competitive Facts Analysis Quality of Earnings Operating Leverage Financial Leverage Price/Earnings Price/Book Price/Sales Price/Cash Flow Break-up Value Liquidation Value