We’ve packaged up everything you need to know about best IR practice in the time of Covid-19, how our previous winners won, and much more. Read on to gain tips and ideas
Investor communications in times of uncertainty
The spread of the novel coronavirus epidemic has cast a cloud over financial markets and marked a tumultuous start to the year for many businesses. While businesses around the world have been moving quickly to navigate the rapidly evolving situation, for listed companies, there is an added, inevitable need to start preparations for communication with external stakeholders as the corporate earnings season kicks off in the next few months. For those listed in Hong Kong and on the Chinese mainland, the timing of disclosure will also likely be delayed, which injects further uncertainty into the financial community, in addition to concerns around business continuity and overall economic impact.
Communications professionals, investor relations personnel and leadership teams will need to be able to mitigate and respond to mounting concerns from the financial community and instill much needed clarity and as much certainty as possible in this uncertain situation. Below are six key areas business leaders should bear in mind when communicating with the investment community.
Work from the inside out In difficult moments such as this, companies need to prioritize timely, quality and consistent communications with employees, vendors and partners. Apart from being an integral component of sound leadership, this will be key in ensuring all of the business fundamentals the investment community values. It will also be a good litmus test – because if your own employees don’t buy into your position, message or initiative, it won’t succeed externally. Communicating internally will require both official and unofficial channels – learn who dominates the informal communications channels in your organization, and engage them early and often.
Be transparent in communicating near-term challenges Communicate transparently and candidly about the short-term challenges the company expects to face from operational risks to disruptions in the supply chain or changes in market dynamics. Transparency is not a sign of vulnerability but of sensible risk management and sound governance. When carried out effectively, it can demonstrate management’s grasp on the situation and its strong leadership capabilities in navigating challenging circumstances. The management team should articulate clearly and to its best ability an assessment of the immediate, material impact of the current situation on the business. Avoid downplaying the impact of short-term disruptions or brushing them off; instead, address the challenges in a clear and transparent way.
Use the opportunity to reinforce the business’ long-term fundamentals This is also a critical opportunity for leadership to highlight and reinforce the business’ long-term fundamentals, which will support an eventual recovery and deliver long-term value. Refresh the messaging on the strengths of the company, from the value of its key offerings to talent and even investment in innovation.
Communicate solutions and commitment… The assessment of the epidemic’s impact should also include communications around solutions and mitigatory measures that the company has in place. It is important to show the company’s ability and resolve to weather the storm. Bear in mind that such investor communications will also be closely observed by other stakeholders and could in turn shape the perception of the company at a broader level.
…but also be ready to respond to concerns and uncertainty Be realistic when communicating your outlook and guidance on the remainder of the financial period and be ready to brace for worst-case scenarios. The current situation may present a prolonged challenge that persists for a long time. Stay abreast of the latest developments, consider possible scenarios and be ready to address legitimate concerns and doubts from the investment community.
Think about your communication goals The interest of your investors will no doubt be weighted toward the business and financial impact of the epidemic. The company would need to demonstrate its commitment in delivering what each stakeholder is looking for. By effectively demonstrating the company’s ability to achieve shared goals and find alignment with its stakeholders (such as business partners and customers) during difficult times, the company also makes its case for its ability to create long-term, sustainable value for investors.
The central goal is to strike a balance between providing an assessment of the impact and measured guidance, as well as conveying long-term confidence and resilience. This will help the company to reassure and provide clarity to investors during times of uncertainty such as the present.
Joanne Wong is a senior managing director in the strategic communications segment of FTI Consulting and is based in Hong Kong.
Forum held in Hong Kong on December 6, 2019
Coming to Hong Kong in December for the IR Magazine Forum – Greater China 2019 proved interesting. The city was in the middle of several months’ worth of civil protests but its capital markets have continued unimpeded since.
The attitude of the 100-plus IROs who gathered that morning to discuss best practices and to network was one of business as usual, however. Recent macroeconomic pressures in the region, and a projected growth slowdown in mainland China, meant the job of communicating clearly with the market had been of particular importance over the previous 12 months.
Throughout the day’s discussions, there were four strands of conversation that seemed to be particularly relevant going into 2020.
Strong ties to the C-suite are crucial for avoiding crises IR has always required close ties to the C-suite in order to work well, but a case study perfectly illustrated why a strong relationship can be crucial in order to successfully navigate a tricky situation. Suki Wong, investor relations director at ANTA Sports, revealed how the manufacturing firm was the recipient of several activist investor reports as well as a presentation with some suggestions on how to improve the firm’s corporate governance within the space of a few months.
Though ANTA’s share price took several hits from these developments, Wong oversaw a quick response that included a clarification announcement, which helped assuage shareholders’ fears, and the timely release of quarterly operational figures and a positive profit alert.
Remarkably, Wong co-ordinated most of these actions remotely, either while outside of the office or – in some instances – out of the country on non-deal roadshows, which she duly had to cancel. Key to being able to do this was collaborating with her team and getting quick responses from her C-suite, often within 10 seconds.
‘Keep investing in your IR efforts, particularly when you’re speaking to senior management,’ was Wong’s advice. It meant that when crunch time arrived, the C-suite understood that ‘it was not just about share price, but also the company’s reputation and integrity and the C-suite’s credibility,’ she added. Thanks to this series of timely responses, a major crisis was averted.
Activists are on the rise in Greater China – and ESG is their focus The trend of investors taking a careful look at a company’s ESG disclosure is certainly on the rise, a panel of sustainability experts agreed, but many are looking for a deeper link between data disclosed and wider corporate strategy.
Gabriel Wilson-Otto, head of stewardship for Asia Pacific at BNP Paribas Asset Management pointed to an increasing incidence of shareholder activism in the region, now on a par with levels recorded in the US in 2010 in terms of the number of activists and campaigns targeting firms.
‘It’s fascinating, as people said the trend would not happen in Asia, but investors clearly care about these issues,’ said Wilson-Otto, who added that investors are often looking for ‘value alignment’ with a potential investee company.
Hendrik Rosenthal, director of group sustainability at CLP Group, said companies need to be on top of this and take care to link ESG data to a company’s overall impact. ‘If you haven’t planned for this or even made your board aware of these issues, I would argue that you’re not very forward thinking,’ he added, advising the audience to consider the KPIs or metrics that may be required by stock exchanges.
Events require preparation, but feedback is key It has been proven time and time again that the success of IR events hinges on how well you can communicate your company’s narrative with investors. For Venus Zhao, general manager of capital markets and corporate communications at Sinic Holdings, it’s about having a ‘very crafted story’ before you even see investors. Her three-part approach includes an appreciation of recent developments at the firm, thorough communication with management and a catch-up with analysts if your upcoming event is organized by brokers.
Most important of all, however, is to follow up after events, said Zhao – because, if ignored, investors may forget about your company in short order.
Another crucial strand is prepping management well, said Chang Rui Hua, group managing director of capital markets and investor relations at ESR. She takes in public views on a weekly or monthly basis and feeds it back to management. She also coaches managers on each investor they meet with a quick five-minute primer so they can form a good impression.
It serves two purposes: it helps her management ‘sound smart’ and well drilled, and gives her C-suite an honest perspective on how it and the firm are perceived. A lot of management [teams] are appreciative of knowing what the market really thinks about them,’ Chang explained.
Social media has more of an impact than you may think One of the day’s most intriguing panels saw two IROs with recent digital overhauls under their belts discuss how technology had impacted their messaging. Emily Lau, general manager of investor relations at Pacific Basin Shipping, shared research that showed 80 percent of institutional investors are now using social media – so it’s crucial to be on top of your firm’s output.
Her strategy at Pacific Basin is to keep various social media accounts that cater for different audiences: Facebook for the firm’s crew and family members, WeChat for Chinese customers and investors or LinkedIn for industry-related friends and brokers. Facebook, in particular, has proven a valuable outlet after Lau oversaw a change from simply posting announcements to posting content more suited to the platform: a series of photos and videos exploring the different cargo shipped by the firm for some did you know? stories, linking to customers’ daily lives.
‘You have to know about the target market,’ Lau said of how to focus social media content. ‘Have a powerful, strategic plan so you can reinforce your corporate message. Then you can deliver it clearly and at a much lower cost.’
Singapore was identified as the top Asian roadshow destination, according to IR Magazine’s Global Roadshow Report. Singapore-based Zaggie Ng outlines her tips for roadshow success
Organizing an investor roadshow is no easy feat. Companies are encouraged to go on regular roadshows to build up trust with the investment community. Hence, it is imperative that investor relations officers do everything it takes to ensure the effectiveness of the whole event. Having been part of over 20 investor roadshows in 2019, I have gathered some know-how and tips that could contribute to overall roadshow effectiveness.
1. Craft an investment story The three key words to remember are clarity, consistency and focus.
It is paramount that key messages supporting the investment case are clear and consistent. These key messages should be embedded within the company’s materials and form the backbone of presentations, the corporate website and annual reports, and be reinforced via concrete examples during the meetings.
2. Shareholder identification and targeting For companies, whether big or small, care should be taken to use senior management’s time as efficiently as possible. Effective investor targeting can really add value to investor relations as it helps the company build a balanced register of long-term, supportive investors. Companies need to be acutely aware of the type of investors they want to meet and who will be beneficial to the shareholder register. They may have to reject any potentially inappropriate meetings.
Smaller companies may choose to outsource this process to an independent roadshow organizer. It is handy to have a target of potential investors that the company would like to meet, and to keep track of the proportion of these investors that the company has met in the last 12 months.
3. Understand the investor’s profile Management needs to understand the investor’s style and be fully briefed before the meeting on what they should be saying and the likely questions that will be asked. Some examples of information that would be useful for roadshow preparations include a fund’s investment mandate and investment holding period, and examples of past investments made into the same space.
4. Frame the session Every investor meeting should begin with a purpose and end with a clear indication of the investor’s interest in the company (whether to invest or not). Take the opportunity to introduce yourself and your role in the company, as well as to ask some direct questions to the investors – for example, how familiar they are with your sector. In my experience, the most productive meetings begin with a good company introduction and engaging storytelling by the management team to demonstrate the business’ growth. Always make sure to end the meeting with feedback from the investors and set a timeline for follow up.
5. Be aware of non-verbal communication and cultural nuances Throughout the meeting, the presenting executive ought to make an active effort to take notice of the investor’s body language and the type of questions that are being asked. While it is essential to prepare sufficiently before each meeting, at times there may be unexpected additions or impromptu meetings to attend to. Hence, it serves well to be able to understand body language and facial expressions. This will help in tailoring the pitch according to how the investor responds and hopefully lead to a favorable outcome.
Another point that is often overlooked is the cultural nuances in business, especially when the roadshow is held across multiple countries. While I am not trying to stereotype, meetings in Asian locations like Singapore, Hong Kong and Japan do tend to be different from meetings in Western countries. Building trust tends to be more relationship-based rather than task-based. Asians are also more comfortable with silence and will not feel uncomfortable if the conversation stops for as long as 30 seconds. Finally, attitudes to risk and uncertainty can differ widely from one culture to another and can strongly influence the way questions are being posed.
6. Be flexible On a roadshow, it is a fact that there may be last-minute changes due to unforeseen events. For instance, it could be a change in meeting location or a shift in meeting time. It may seem disruptive to the entire meeting schedule but do not dismiss the need to reschedule the meeting or discuss over a conference call separately. It can prove to be beneficial if the roadshow schedule was planned with the foresight to accommodate such unforeseen changes, for example having sufficient time to travel between meetings or scheduling an extra day on location to potentially fit in new meetings.
Often, the roadshow schedule does not fill up until the week beforehand. Investors get multiple meeting offers coming across their tables and they may not like to lock down meetings too far in advance.
7. Follow up promptly and do not be myopic Conducting roadshows is an ongoing process. It is unlikely that the decision to invest is made within the first meeting, but an impression – whether good or bad – is certainly key to that investment decision. IROs should not dismiss the importance of a follow-up call or thank you note either, as it could aid in the process of gathering feedback on the meeting.
Zaggie Ng is an investor relations associate at Spark Plus
What makes for an award-winning approach to multimedia, technology and social media
The nature of technology means that what makes for an award-winning approach to investor relations can vary widely: from chat tools used to keep in touch with retail investors to well-made in-house videos that showcase everything from the latest site visit to key elements of company strategy.
Depending on the region, IR Magazine hands out awards to companies for best use of multimedia for IR, best IR website and/or best use of technology and social media for IR – but all fall under that same tech umbrella, with judges looking for innovation and ideas that stand out from the crowd. What unites the winners is a sense of going beyond best practice and doing more than is expected. But let’s start with the best practice part: what’s the baseline before you even start polishing the trophy cabinet?
IR Magazine has published several research reports on IR teams’ use of technology, with key findings including the fact that audio webcasts are the most widely used – and considered the most useful – multimedia format for investor relations, while corporate video and infographics have seen the greatest growth in use over the past three years. Those statistics come from the IR and multimedia research report, which also suggests that ‘IR practitioners see video as a way of personalizing the company for investors and bringing the company’s operations to life.’
In the IR Websites research report, we reveal that when it comes to what the investment community wants, the three most important types of information are corporate and regulatory press releases, a named investor relations contact and a schedule of upcoming events and reports.
In the Technology & IR report, our research finds that the global average spend on technology is $64,440 – though of course this varies by region, cap size and sector. Overall, however, it is the IR website that accounts for the biggest portion of this spend. And as you look through the list of where else that cash goes, it’s very much about getting the basics of technology right, and spending on areas where you might see the biggest return on investment: from surveillance and targeting tools (second and third place, respectively) to preparing filings or using technology for the AGM (fourth and fifth, respectively).
While our awards recognize best practice uses of technology, the profession hasn’t historically been the biggest early adopter. That’s because budget and team size constraints make IROs less likely to spend time and money on tools or tactics they’re not sure will have the desired impact; and because financial regulation often means IROs will err on the side of caution over risk. But that doesn’t mean you can’t be innovative – and it’s the innovative IR teams that take home awards.
Standing out from the crowd One such company, which won the award for best use of technology and social media for IR at the IR Magazine Awards – US 2019, is software firm Blackbaud.
The company was recognized for several initiatives, including its development of ‘a portfolio of apps that all members of the team have downloaded onto the phones and tablets that collectively run our IR program,’ says Steve Hufford, director of IR at Blackbaud.
He adds that ‘perhaps the most unique and techsavvy approach to engage the IR community’ is the firm’s approach to social media: namely, its use of LinkedIn. Blackbaud’s posts to the professional social media site now receive thousands of views, with a system to link through to the IR website as well as adding people to the company’s distribution lists ‘based on company profiles to ensure appropriate targeting.’
While Blackbaud’s win came in 2019, the IR team’s digital reinvention began back in 2014 when a new management team came on board and the company decided to in-source its IR function.
‘At that time, company recognition was extremely low on Wall Street, with only two covering sell-side analysts, and there was no formal strategy in place to guide the investor relations function,’ explains Hufford. So the firm’s ‘decade-old’ IR website got a revamp. ‘Essentially, we created a one-stop Blackbaud shop and trained the investment community to leverage the website for documentation, audio and video content.’
Today the company has a ‘carefully curated program to drive traffic to our website and raise Blackbaud awareness,’ Hufford continues. ‘We have campaigns to market, we have CEO and CFO presentations, quarterly results and company initiatives. We also use social media to showcase innovation, announce new products, promote social good and further the IR profession.
As well as the company’s IR Magazine Award for its multimedia efforts, the response from the investment community has been extremely positive, notes Hufford. He cites Rob Oliver, Baird’s software analyst, who says: ‘The Blackbaud IR team uses LinkedIn innovatively and effectively, both as a corporate communications tool and a way to build closer, more intimate relationships with current and prospective shareholders.
‘A LinkedIn connection enables Blackbaud IR to share its company values in a less formal manner than a standard press release, while allowing it to learn more about the passions of its shareholders and prospects. This likely results in deeper relationships and more fruitful engagements at meetings and conferences.’
So what advice would Hufford offer other IR teams looking to replicate Blackbaud’s multimedia success? ‘Leverage your network and explore the tools that work best for you and your program,’ he says.
IR on film Moving to Europe and to 2017, it was the Finnish pulp and paper company Valmet that took home the award for best use of multimedia for IR at the London event. As with Blackbaud, the original goal was to widen awareness of the company.
What has grown to a suite of videos for the company started out as an idea to help more analysts and investors ‘attend’ a site visit Valmet was putting on three years ago, explains Calle Loikkanen. Back then he was director of IR at the company but earlier this year he joined food and drinks packaging firm Huhtamaki. ‘We were still a fairly young company, so people didn’t know us that well,’ he says of the original thinking behind that first Valmet site visit video.
Noting that not everyone can physically make it to a site visit – which perhaps becomes even trickier when the site itself is in Jyväskylä, around 170 miles north of the Finnish capital Helsinki – Loikkanen and his team decided to make a highlights video. ‘With that first one, we just wanted to create better investor understanding of what we do as a company and what our products are,’ he says. But having found that video production was reasonably cheap and easy – even when you’re selftaught and doing it all in-house – the team made more.
There’s been some fine-tuning of the way the videos are produced since that first site visit: from around five minutes long then, they’ve now been shortened to about two minutes because, as Loikkanen says, ‘people just don’t watch long videos.’ Valmet has also added more graphics and animation in the form of bullet points and arrows to highlight certain facts or pop-up slides. And all this is done with equipment that cost around €1,500 ($1,600) – the IR team share this cost with the communications department – a €300-a-year subscription to Adobe editing software and a weekend or so spent watching YouTube tutorials.
Clearly a success for the firm, Loikkanen says that while he looks at the analytics provided by YouTube and the like, it isn’t video views that count. ‘I don’t care about the number of viewers because I know that the stuff we do isn’t that exciting,’ he says. ‘But I think it’s enough if one person says, I watched that video and it was good – and it’s really made me understand your company better. If we get that kind of response and that kind of feedback, the video has been a success.’
This is also something he says would be very easy to replicate for other IROs – with minimum investment or risk. ‘You don’t even need to buy the equipment we bought; you could shoot a video on your phone and there’s a lot of free editing software out there,’ he explains. ‘You’ll get faster as you make more videos but if you try it and it doesn’t come out well or you think it hasn’t worked, you don’t have to publish it. You never have to show it to anyone.’
Buzzing the buy side In Hong Kong, it was Anta Sports that took home the award for best use of multimedia for IR at the IR Magazine Awards – Greater China 2017. And like Blackbaud, the firm won with a multi-pronged approach to multimedia. Something it already stood out for, however, was its use of WeChat, the Tencentowned messaging app and China’s answer to WhatsApp.
WeChat is now an established part of the Asian IR toolkit, just as some brave European companies are starting to make use of WhatsApp for IR. But back when Anta Sports started using the app, it was a novel idea. Now, Suki Wong, IR director at the Xiamenheadquartered company, says it’s a definite go-to when engaging with Chinese investors.
Given the many types of multimedia Anta Sports makes use of, how does the company decide where to allocate resources? It’s all about ‘return on investment,’ says Wong, who notes that while there’s a lot of choice out there, ‘limited time and budget mean we need to identify which group of investors we want to target and then choose the most appropriate method.’
And while compliance remains something IROs have to keep in mind when using chat tools like WeChat, the app has evolved to become even more useful to IR teams. ‘WeChat is about more than just communications now,’ Wong explains. ‘There are lots of little tools within it – such as contact saving, event invitation sharing, surveys – that you can use to promote your IR activities.’
What these three examples alone show is that while there’s a lot to be learned about best practice around IR and technology, when it comes to actually winning awards for your efforts, it’s about standing out from the crowd. And while each of these firms might have a different approach to how it uses tech, what unites them is that it’s not technology for technology’s sake. This isn’t just about posting to social media or putting together a shiny corporate video – it’s about better connecting with the investment community. That’s what marked these firms out as winners in their field, so as Loikkanen advises: ‘Try it – it might turn out great’.
This article was published in the Winter 2019 issue of IR Magazine.
