Inside Investor Relations – Volume 12: How to construct an IR plan?

(Source: PROSKY)

Planning an efficient and effective IR program is one of the most important responsibilities of IRO and investor relations team at any company. Based on our hybrid experience working with micro/small cap companies with no analyst coverage, to larger cap companies with more coverage, and incorporating feedback from institutional investors, we recommend considering the following when building an IR plan.

Develop Key Objectives

In order to develop an effective IR calendar, it is important to establish key objectives for short term (yearly) and for longer term. You also need to determine how much time the management team can afford to offer for meeting investors via various formats. We would also advise aligning your investment profile with your targeted investors to ensure your goals are realistic. As you grow, your investment profile will change, and so will your investor base. For more information about conducting investor targeting, please refer to our previous article “Inside Investor Relations – Volume 3 – Investor targeting”

If the company’s key priority is to gain more long-term shareholders, then perhaps you would need to identify Life Insurance Companies in Taiwan as well as foreign long-only investors as primary targets. This also applies if your objective is to gain sell-side coverage, your efforts must align with your goals. You may not be able to gauge the effectiveness of the program immediately, but it is important to define the focus of the program so that you are on the right path towards accomplishing these goals.

There are many types of IR activity

There are many types of investor activities. When developing your IR program, you should consider what is the optimal balance of deal/non-deal roadshows, conferences, physical meetings (group or one-on-one), virtual meetings and factory tours.

(1) Deal/Non-Deal Roadshows - In general, roadshows to Hong Kong and Singapore are the most productive use of time for management teams to spend out of the office. Because these meetings are held at the asset managers’ offices, it is much easier for the key decision makers such as CIOs or PMs to attend. On the other hand, it is more convenient to conduct domestic roadshows in Taiwan, as investors are mostly located in Taipei, generally one or two days will do, vs. a five-day trip to Hong Kong and Singapore. To compare further, roadshows to Europe and US could take up to two weeks.

(2) Conferences - Conferences are also an important activity to consider for your IR calendar. One advantage to participating in a conference is the ability to meet a number of investors in one location. This applies to conferences locally and abroad.

(3) Physical meetings (Group or one-on-one meetings) - Group/One-on-one meetings at Company headquarters. This is less of a time commitment for management teams given that they do not have to travel, but it does require higher commitment from investors who have to make the trip to your offices, especially foreign investors. Some investors might request facility/factory tour along with the meeting.

(4) Virtual meetings - Given the recent Covid-19 pandemic and the travel bans, it is the new normal to use software such as Zoom, or WebEx, etc.…to meet with investors online. We believe this type of meeting is here to stay even if the pandemic subsides, many companies have found this to be a very convenient and cost-effective way to communicate with investors.

When should you conduct IR activity?

(1) Result release dates - According to Taiwan Stock Exchange, first quarter results should be released no later than May 15th, second quarter results should be released before August 14th, third quarter results before November 14th, and fourth quarter/annual report should be released no later than March 31st of the following year. Every company will be slightly different, but you need to be aware that there is a two-week quiet period before the announcement of the result, so do not engage in investor activities during those times. Therefore, right after reporting quarterly earnings is a good time to be out on the road. This minimizes misinterpretation due to the fact that you aren’t allowed to divulge certain information before earnings release. It also gives you the opportunity to clarify key messages from the earnings release.

(2) Investor conference dates - Foreign bulge bracket firms generally will host large scale investors conference every year around the same time. Many foreign investors would be invited to come to Taiwan to attend the conference (pre-covid 19). Since it could be a long trip for some investors, they would usually come a week prior or stay an extra week after the conference, so that they can visit as many interesting Taiwanese companies as they can. With proper planning, Taiwan companies can take advantage of this opportunity to meet many foreign investors, even if you are not invited to present at the conference. For example, one large broker in Taiwan usually holds their Annual Asian Technology Forum around late August or early September every year. As such, considering local conference timing when hosting an IR event might be a good idea in order to better communicate with foreign investors. (foreign brokers’ investor conference: March – Bank of America (ML); May – Citi; June – UBS; September – Credit Suisse)

Who should present the company?

For mid/small cap Taiwanese companies, we generally suggest that the Chairperson or CEO lead the meeting. As smaller cap companies must compete harder for capital and attention in the market, the time with investors is even more valuable. By having the Chairperson or CEO present, the investor can quickly gain insight into the firm and the industry, and most importantly build trust with investors. Of course, the management’s priority is to run the business, which is why you need to carefully balance the mix of IR activities.

For larger companies, besides Chairpersons and CEOs, other executives such as the GM or Head of Sales could also be good candidates to step-in for C-suite members to communicate with investors, though we would also recommend that the CFO and IRO accompany them.

Sell-side analysts are an integral part of the ecosystem

Lastly, don’t forget about sell-side analysts when planning your IR program. Sell-side analysts are an integral part of the IR ecosystem, particularly for mid/small cap companies with limited analyst coverage. You need to ensure that you provide adequate opportunities for them to access IR and the management. Even though your efforts may not result in gaining coverage from the analyst, they may write a non-rated note on the company or mention your firm in industry coverage.

If you are lucky enough to be a company with coverage, it is important to also maintain and build relationships with sell-side analysts, even when they have a sell-rating. Analysts are paid to have a view, even if you disagree at the time. It is also appropriate to communicate with them on one-on-one basis to present your story more clearly. The upside could be that they learn more information about your company and change their rating to Neutral or to Buy, but even if they continue to maintain a sell-rating, there is little downside.

Develop your key IR objectives is the most important task

There is no set template to follow as every company’s investment profile could be different because of the industry or just simply different stages of the growth cycle. Regardless of differences, we believe that all companies can benefit greatly by developing your key objectives, determining the types of activities IRs will engage in, considering the timing of the activities, and knowing where to focus your attention and time.

QIC has many years of experience in corporate access services. We plan, schedule and execute tailor-made roadshows and targeted investor events for high-quality corporate clients. Besides, QIC helps corporates formulate a set of investor relationship strategies, pairs up qualified investors with corporates, and assists companies and investors to achieve effective two-way communication, so as to achieve the purpose of enhancing shareholder value. QIC does not provide execution services and is thus considered MiFID II-exempt by institutional investors who welcome QIC’s services and access to senior management of quality companies. If you are interested in learning more about our services, you are welcome to contact us.

Contact Person: Yvonne Huang yvonnehuang@qtumic.com