Harold Woo: my IR journey
My IR journey began in June 2003 when I joined CapitaLand as head of IR. Prior to that, I had spent 19 years in stockbroking, starting as an analyst in Singapore in 1981 after graduating from Imperial College in London. I saw the career change as a natural transition for a former sell-sider, and used to joke that while I’d once had many love affairs with many firms, I now had only one love affair with one company.
Harold Woo, CapitaLand
Naturally, I was strongly influenced by my experience from the sell side and this shaped how I practiced IR at CapitaLand. To be really successful in any new endeavor, one needs to be passionate about it – but passion for the job will only take you so far. One also has to focus on building relationships and gaining the trust and confidence of analysts and investors.
Besides these external relationships, internal relationships within the organization are equally important. IR is not a silo function and top management should emphasize across each of the business units that IR is part and parcel of their responsibility. Fortunately for me, CapitaLand’s top management recognizes the strategic value of good investor relations and makes itself available to meet with investors and analysts regularly.
While the immediate IR team of four may be relatively small in number, within the CapitaLand Group there are four listed sponsored real estate investment trusts (REITs), each with its own IR team of at least two people. As group-level head of investor relations, I am responsible for co-ordinating the IR approaches of each of these satellite teams. Since 2009 I have initiated formal quarterly key messaging meetings where we all huddle together before the reporting season.
I also attend the board meetings of each of the listed entities, including my own. This is extremely useful as it allows me to have a good feel for the operating performance of the four different business units. Being well informed improves my credibility in my engagement with the investment community. In return for my involvement on the strategic side, I am expected to provide my opinion to management about likely investor reaction and current market sentiment.
When I first came on board, I doubled the frequency of our share register analysis to four times a year. I also noticed that the share register was skewed toward the local and more traditional UK pension houses and mutual funds. At that point the bulk of the capital flow was coming from the US and we were clearly under-represented. I worked with several of the bulge-bracket broking houses and made a concerted effort to go out and meet with US investors. We caught the up-wave for the Chinese property market and several large US funds built up sizable positions in CapitaLand as a proxy for the Chinese property market.
The market clearly liked CapitaLand’s capital recycling model, in which we inject our stabilized income-producing assets into our sponsored REITs. Investors and analysts rerated our stock because the company was able to access multiple platforms to recycle assets and tap diversified sources of funds to preserve financial flexibility. The share price hit an all-time high in 2007.
At the height of the global financial crisis at the end of 2008, the world’s economy was in panic mode. All asset classes, except those deemed the safest, suffered dramatic plunges in value. But with equal doses of both foresight and luck, CapitaLand emerged from the crisis relatively unscathed – perhaps even stronger – thanks in no small part to its decision to divest a total of eight prime commercial buildings in Singapore for an aggregate value of close to S$4.4 bn ($3.3 bn) before the crash.
In 2009 CapitaLand and its subsidiaries had the confidence to ask investors to demonstrate their faith in the group with four rights issues and an initial public offering of CapitaMalls Asia. CapitaLand started the ball rolling in February 2009 with its own rights issue – the first time it had asked shareholders for capital since the company was formed in 2000.
We conducted a global perception study in June 2009 to take stock. The financial crisis had tested the business model and its reliance on open credit markets and capital recycling. It had also left fund managers in general wanting more transparency about the business and less debt on the balance sheet. These are some of the issues the perception study threw up:
- Respondents questioned CapitaLand’s global strategic focus. They believed the company should refocus on its core markets in East Asia
- The private equity funds used by the company to incubate assets are viewed as a ‘black hole’ in terms of transparency
- From the market’s perspective, CapitaLand’s China story is particularly exciting. Respondents want as much information as possible on this area
- There is a lack of interest in – and knowledge and support for – Australand. The market is keen to know CapitaLand’s strategic intent with this business
- CapitaLand is still one of the most complex stocks to cover. Some respondents suggested CapitaLand receives a ‘complexity discount’ in its valuation
- The market is keen to receive an update on how CapitaLand’s cash balance might be deployed. Does the company have specific metrics for the deployment of funds?
- The company should adopt an annual investors day.
Senior management did listen and considered some of this feedback, and several recommendations were implemented. The company has to move with the times and the type of information disclosed has to be sensitive to the current concerns of the market, while also focusing on attracting shareholders aligned to our long-term interests.
In 2013, following another perception study and a strategic review, CapitaLand was reorganized and streamlined into four business units: CapitaLand Singapore, CapitaLand China, CapitaMalls Asia and The Ascott. Last year, we successfully completed our strategic streamlining by fully acquiring and de-listing CapitaMalls Asia and divesting Australand, and now have a simplified structure comprising four fully owned business units.
This simplified structure reinforces CapitaLand’s investment proposition as a single listed developer integrated across asset classes, providing a good balance between recurring and development income. We will continue our capital management strategy using the listed REITs, funds and various capital market platforms, as well as growing our assets under management. We are well positioned to take on opportunities and challenges in an increasingly dynamic landscape while staying committed to deliver a sustainable return on equity in excess of 8 percent in the medium term. Another leg of my IR journey has just begun.
Trending in South East Asia
Jean Zhuang, part of the secretariat at Singapore’s IR association IRPAS and director at Tulchan Communications Asia, lists some of the key trends affecting investor relations in South East Asia:
– Corporate governance discussions are becoming more common as marketplaces develop, with more discussions on quarterly reporting
– Integrated reporting has started to take off, with a few companies making the move from sustainability reporting
– IR-related technologies are available to help IROs optimize their investor relations programs, including intelligence and analytics software for investor targeting and event management software
– IROs are taking a more international approach as western fund managers look to invest in South East Asia
– Qualifications are becoming more accessible for IROs. For example, the International Certificate in Investor Relations has launched in Singapore.
This article appeared in the summer 2015 print issue of IR Magazine