Four trailblazing IR teams talk about the challenges and opportunities of operating in emerging markets
Operating in an emerging market might mean you have to work that little bit harder, but Dr Adit Laixuthai, chief IR officer at Kasikornbank, one of Thailand’s largest banks, says the challenge keeps things fresh – and even ‘fun’ for his team – and promotes good practice. You have to stay alert, as nothing is ever 100 percent ready and ‘we have to strive for the best,’ he says, adding that IR success in an emerging market requires consistency and an ability to ‘read the changing environment correctly so you understand the volatility you sometimes observe a little bit more compared with other markets around the world.’
‘A lot of companies have proved that good IR programs can make a difference’ – Adit Laixuthai, Kasikornbank
Laixuthai, who holds an undergraduate and two master’s degrees, as well as a PhD – and jokes that he may be the oldest IRO in the Thai investor relations community – recalls joining the IR department in 1999 and being sent straight out on the road with the CEO to raise capital. ‘At that time I had no clue,’ he says. But starting out early has kept his career exciting, he adds, allowing him to shape Kasikornbank’s IR program and watch it grow.
One of his department’s big achievements has been to integrate the company’s ‘customer-centric’ strategy into dealings with investors and analysts. In fact, Laixuthai explains that in recent years this philosophy has trickled down to every level of the company. Consistency over the years, coupled with a CEO and board that genuinely believe in the value of IR have ‘set the tone from the top of the organization,’ he says.
Among the common questions Laixuthai hears from the investment community is the issue of corporate governance. As Thai firms come round to the idea that transparency is good for business, Laixuthai says management teams across the country are increasingly noting the worth of a high-quality IR program. ‘A lot of companies have proved good IR programs can make a difference,’ he observes.
This has led to an ongoing change in the perception of IR in Thailand, which Laixuthai says will mean IR is finally seen as ‘a true profession people want to be in.’
|Sector: Banks & financials
Market cap: $15.1 bn
Listing: Stock Exchange of Thailand
IR team size: Seven
IR awards: Winner of best investor relations by a Thai company at the IR Magazine Awards – South East Asia 2012
Universal Robina, the Philippines
Philippine investor relations is going through a transformation, says Mike Liwanag, head of corporate planning and IR at Universal Robina. Increasingly, the country’s firms are tapping into the capital markets and realizing the value of a good IR team, he explains, estimating that the top 30 companies in the Philippine Stock Exchange index now have an IR program. ‘The rerating and bullishness in the Philippines is also driving the need for better IR programs at these firms,’ he says.
And while Universal Robina may have recognized the importance some years ago, it too has had to make adjustments. ‘[We] realized the need for better communication and transparency as far back as 2006 when we did a follow-on offering for the company,’ says Liwanag, explaining that ‘[Universal Robina] is now seen by analysts and funds as a ‘changed’ company because we managed to implement improvements in the way we deal with our stakeholders.’
These changes include clearly communicating strategic direction, holding a quarterly investor briefing and earnings call – which Liwanag says is rare in the Philippines – active participation in investment conferences and at least one non-deal roadshow each year. But he adds that ‘the most basic thing we need to do is educate analysts and fund managers – especially those in developed markets like Europe and the US – on the dynamics of a company operating in emerging markets.’
Liwanag, who joined Universal Robina 12 years ago but only added IR to his corporate and strategic planning roles at the start of 2011, says he tried to take a new approach to IR, talking about the business from a strategic and operational standpoint, which he feels is the most effective way of communicating value to shareholders. And he has had a good story to tell: ‘When I assumed the IR role in January 2011 our market cap was around $1.7 bn; this has climbed to $6 bn after 27 months.’
Now the rest of the country is catching on as well. ‘[IR] is slowly being recognized as a crucial function and a strategic partner for business,’ Liwanag says. With the market performing well, IR in the Philippines will ‘slowly evolve into a practice no different from that in the developed markets and will be seen as a vital strategic enabler of any listed firm.’
|Sector: Consumer (food & beverages)
Market cap: $6 bn
Listing: Philippine Stock Exchange
IR team size: Three
IR awards: Nominated for best investor relations by a Philippine company at the IR Magazine Awards – South East Asia 2012
‘Investor relations is about much more than just data accuracy and provision of detailed information’ – Steven Tan, CIMB
Winner of the best IR by a Malaysian company award for the third year running, banking group CIMB has attained a highly visible place in the South East Asian IR scene, traditionally dominated by Singaporean firms. Along the way it has positioned itself as a flagship for emerging IR in the region.
The firm, founded in the early 1920s as Bian Chiang Bank and renamed Commerce International Merchant Bankers (CIMB) in 1986, has now grown to become ‘the only regionally integrated universal bank in the ASEAN region and is arguably on its way to becoming the largest Asia-Pacific-based investment bank,’ explains Steven Tan, CIMB’s head of IR.
Investment banking has clearly been a focus for the group: CIMB bought the Asian investment banking business of Royal Bank of Scotland last year, including the bank’s franchise in Australia. Tan, however, cites the bank’s integrated regional franchise as the principal attraction for investors.
‘CIMB has positioned itself at the forefront of intermediate intra-Asian trade and capital market flows, underpinned by a strong consumer banking franchise in ASEAN,’ he observes.
The bank reported a record net profit of RM4.35 bn ($1.5 bn) for the full year 2012, and when it comes to communicating this good news – or any other information – to the local investment community, Tan unsurprisingly favors a ‘transparent and honest’ approach. ‘Investor relations is about much more than just data accuracy and provision of detailed information,’ he says. ‘A genuine effort to provide greater understanding of business issues goes a long way toward providing comfort and belief to the investment community.’
While Tan believes the role of an IR manager in Malaysia is generally becoming more strategic, he also sees a notable difference in outlook between the country’s large caps and smaller firms. ‘The larger capitalized companies in Malaysia are undoubtedly placing a greater emphasis on hiring more senior IR managers,’ he says – a move he believes reflects the current ‘rising professionalism and increased foreign buy-side focus.’
The transition is proving much slower on the small and mid-cap front, however, with many senior managements – ‘in particular the more entrepreneurial corporates’ – still struggling with the concept of ‘relinquishing this role to [dedicated] professionals.’
Furthermore, Tan highlights that the function’s professionalization and contribution to return on investment are the big talking points in the local IR community right now. ‘Two major points of contention are the struggle to determine the true value of IR and a resistance to recognizing the professional IR role,’ he confirms. No doubt CIMB’s sterling performance will inspire other companies listed on Bursa Malaysia and lead the way to improved IR practice in the country.
|Sector: Banks & financials
Market cap: $18.6 bn
Listing: Bursa Malaysia
IR team size: Three
IR awards: Winner of best investor relations by a Malaysian company at the IR Magazine Awards – South East Asia 2012
Astra International, Indonesia
‘Those who invest in active IR programs will benefit the most from increased investor interest’ – Tira Ardianti, Astra International
Befitting a company worth $30 bn, Astra has a well-staffed IR team of four led by Tira Ardianti, who first joined the company as an IR analyst. ‘I was rotated a couple of times to other corporate functions during my time here,’ she explains. ‘I have been in corporate planning, corporate treasury and corporate communications, and about two years ago I was assigned to be responsible for the IR department.’
In a region where IR teams are often left out of the management loop, Ardianti confidently asserts the value of IR to executives and the overall business strategy of listed companies. Effective IR is key for issuers that want to ‘expand their business through better access to capital markets,’ she states. To stay competitive, IR teams must constantly improve their strategy, systems and people, adds Ardianti, referencing kaizen, a popular business philosophy in Asia that calls for continuous improvement across all areas.
The company has recently cut back on the number of roadshows it does – Ardianti says she barely went on any over the last three years, mainly due to timing issues – but it does attend one overseas conference each quarter, as well as most of the relevant domestic conferences. Astra also holds two analyst gatherings a year to discuss its half-year and full-year results. Right now investors and analysts are most concerned over commodity price volatility, as well as potential government regulation, she notes.
Looking to the future, Ardianti predicts the fertile IPO market will continue to drive up standards. ‘In Indonesia every year there are new companies listing on the stock exchange and clearly those firms need IR people to actively interact with the financial and investment communities,’ she says. ‘As management is very busy, the value of IR is critical at this point. Those who invest in active IR programs will benefit the most from increased investor interest.’
|Sector: Miscellaneous industry
Market cap: $30 bn
Listing: Indonesia Stock Exchange
IR team size: Four
IR awards: Nominated for best investor relations by an Indonesian company at the IR Magazine Awards – South East Asia 2012