Developing and improving investor relations - the case study of Bac Viet Group = Xây dựng và nâng cao hoạt động quan hệ nhà đầu tư - nghiên cứu trong trường hợp cụ thể của thép Bắc Việt

xi LIST OF ABBREVIATIONS AGM Annual general meeting BOM Board of management BOD Board of directors CEO Chief executive officer CFO Chief financial officer BVG The stock code of Bac

VIETNAM NATIONAL UNIVERSITY, HANOI

SCHOOL OF BUSINESS

NGUYEN THANH CONG

DEVELOPING AND IMPROVING INVESTOR RELATIONS

THE CASE STUDY OF BAC VIET GROUP

Major: Business Administration

Code: 60 34 05

MASTER OF BUSINESS ADMINISTRATION THESIS

Supervisors: Vu Huy Thong, PhD

Ha Nguyen, MBA

Hanoi - 2013

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TABLE OF CONTENTS

ACKNOWLEDGEMENT i

ABSTRACT ii

TÓM TẮT iv

TABLE OF CONTENTS vi

LIST OF TABLES ix

LIST OF FIGURES x

LIST OF ABBREVIATIONS xi

INTRODUCTION 1

1 Necessity of the thesis 1

2 Research aims and objectives 2

3 Research questions 2

4 Scope of study 3

5 Data Sources and Processing 3

6 Research method 3

7 Significance of the study 4

8 Limitations 4

9 Expected Results 4

10 Short introduction 5

CHAPTER 1: LITERATURE REVIEWS OF INVESTOR RELATIONS 6

1.1 The concepts of investor relations 6

1.1.1 The definitions 6

1.1.2 The benefits of investor relations 7

1.1.3 Targeted audience of IR 8

1.2 The investor relations team 15

1.2.1 Company management 16

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1.2.2 Financial Public/Press relations (PR) firm 17

1.2.3 Investor relations consultancies 18

1.3 The procedure of developing an investor relations strategy and program 19

1.3.1 Investment proposition and setting goals for IR 19

1.3.2 Forming investor relations team 21

1.3.3 Identifying, attracting and retaining investors 21

1.3.4 Knowing market expectations and forming compelling messages 21 1.3.5 Developing financial calendar 23

1.3.6 Using investor relations tools 23

1.3.7 Improving investor loyalty and retention 28

1.3.8 Managing negative communication and crisis 29

CHAPTER 2: INVESTOR RELATIONS IN BAC VIET GROUP 30

2.1 An Overview of BacViet Steel 30

2.1.1 Bac Viet Group Structure 30

2.1.2 Charted capital increasing process 33

2.2 IR activities in BacViet Steel 36

2.2.1 Current status of BVG stock 36

2.2.2 Operation of IR team 39

2.2.3 IR activity in Bac Viet Steel 39

2.3 Evaluation of IR activities in BVG 42

2.3.1 Strengths 42

2.3.2 Weaknesses 43

2.4 Chapter review 44

CHAPTER 3: RECOMMENDATIONS TO INVESTOR RELATIONS ACTIVITIES OF BAC VIET GROUP 46

3.1 Forming investor relations team 47

3.2 Identifying, attracting and retaining investors 48

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3.2.1 Identifying the current shareholder base 48

3.2.2 Shareholder identification methods 48

3.2.3 Identifying the appropriate shareholder base 49

3.3 Knowing market expectations and forming compelling messages 50

3.4 Developing financial calendar 51

3.5 Using investor relations tools 53

3.6 Improving investor loyalty and retention 65

3.7 Managing negative media communication 66

3.8 Chapter review 66

CONCLUSION 67

REFERENCES 68

REFERENCES 69

APPENDIX 1 71

APPENDIX 2 78

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LIST OF TABLES

Table 1.1: IR messages by theme 22

Table 2.1: Bac viet Steel subsidiaries 30

Table 2.2: Bacviet Steel has associating companies 31

Table 2.3: shareholders structure of Bac Viet Steel 34

Table 2.4: Number of share hold by BOD, BOM and Supervisor board 34

Table2.5: Number of share hold by big shareholders (more than 5%) 35

Table 2.6: P/BV ratio of companies listed in HNX in metal industry 37

Table 2.7: Average daily volume and value of BVG 37

Table 2.8: BVG Investor Relations Strengths and Weaknesses 45

Table 3.1: Sample financial calendar for 2013 fiscal year of BVG 52

Table 3.2: Best practice of a website content and structure of BVG 54

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LIST OF FIGURES

Figure 1.1: Media matrix 13

Figure 1.2: The model and process of investor relations 15

Figure 2.1: Bac Viet Steeel Structure 32

Figure 2.2: Bac Viet Steel Diversification Road Map 33

xi

LIST OF ABBREVIATIONS

AGM Annual general meeting

BOM Board of management

BOD Board of directors

CEO Chief executive officer

CFO Chief financial officer

BVG The stock code of Bac Viet Steel in HNX IRO Investor relations officer

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ABSTRACT DEVELOPING AND IMPROVING INVESTOR RELATIONS

THE CASE STUDY OF BAC VIET STEEL

Nguyen Thanh Cong MBA Candidate, 2007 – 2009 Hanoi School of business Vietnam National University, Hanoi Supervisors: Vu Huy Thong, PhD

Ha Nguyen, MBA

March 2013, 90 pages

In most listed companies, Investor Relation activities are material information disclosure and investors‟ rights fulfillment In fact, Investor Relation can get strategic advantages if the company uses it actively, effectively and professionally Bac Viet Steel has been reformed to joint stock company since 2008 and was listed in 2010 with the stock code of BVG Bac Viet Steel is a small company compared to others in steel industry Therefore, Bac Viet Steel needs to establish professional and effective Investor Relation activities to gain more competitive advantage

In Bac Viet Steel, Investor Relation is considered important Investor Relation team is manage directly from Chairman/CEO However, all Bac Viet Steel‟s IR activities do not follow a plan or program It just fulfills the regulatory requirement or improvised action The thesis is aimed to improve Investor Relation in Bac Viet Steel to make a competitive advantage

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The introduction part of the thesis including: the necessity of the thesis, the research aims and objectives, the research questions, the research methodology, the scope of the research and the significance of the research Chapter 1 researches the current theories of IR activities In this section, the definition, objectives, audiences of IR activities are clearly defined There is not a perfect model to organize an IR division for all companies Based on models of implementing an IR program, the selected model features are in the following order: (1) identify the current shareholder and targeted shareholder (2) attract and retain shareholders (3) understand market expectations and form compelling messages (4) Develop the financial calendar (5) Select and implement IR tools (6) Deal with crisis communication in Investor Relations

Chapter 2 analyzes Bac Viet Steel‟s Investor Relation activities, including the strengths and weaknesses Acknowledgement of the leaders about IR is one of the strength, but weaknesses of IR activities were identified as (1) Bac Viet Steel hasn‟t applied any IR program model (2) BVG does not have fulltime IR staff (3) some short backs with IR activities

Based on above analyses, Chapter 3 presents the solutions and recommendations for Bac Viet Steel to correct the weaknesses and to enhance

IR activities This chapter also provides details of how to implement an IR program in Bac Viet Steel, and improve investor loyalty and retention

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INTRODUCTION

1 Necessity of the thesis

When being listed on the stock exchange market, the company must comply with the laws and regulations of the stock exchange market as well as overall legal framework These regulations may vary from the disclosure of information to production of particular financial statements As a result of all

of these compulsory tasks and the active promotion activities of companies, a new business area has been created - Investor Relations (IR) In other words,

IR is a job that has only recently appeared in Vietnam - it is the activity of listed companies to create a 2-way communication with investor communities

Vietnam stock market is in the early stage, in many listed companies, IR activities are just disclosure of basic information and investors‟ rights fulfillment The stock market in the world has a much longer history and IR activities is the way to achieve purpose of the company when listing in the stock market – capital competing

Therefore, it is necessary to research theoretic, models of IR activities

to apply to Bac Viet Steel which listed in Hanoi Stock Exchange (HNX) with stock code BVG, in order to build up an effective IR strategy and program, which will contribute significantly to the overall strategy of Bac Viet Steel in the near future This is the reason that the author chose this topic:

“BUILDING AND IMPROVING INVESTOR RELATIONS

THE CASE STUDY OF BAC VIET GROUP”

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2 Research aims and objectives

The aim of this thesis is to (1) propose a suitable model for an IR division, (2) propose a model to implement IR activities, (3) and give some recommendations to enhance the current IR activities in Bac Viet Steel The ultimate aim of this thesis is to make the IR activities in Bac Viet Steel more professional and efficient, achieving international standards In order to do that, there are some objectives that should be reached:

 Thoroughly research current theories of IR activities, including: models of constructing the IR division, models of implementing IR programs and IR tools

 Analyze Bac Viet Steel‟s current IR activities and define its strengths and weaknesses

 Give recommendations to Bac Viet Steel for the organization of its

IR division, implementation of its IR program and improving its IR activities in general

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 What should be done to implement IR program in Bac Viet Steel to make it more efficient and support the general strategy of Bac Viet Steel in the future?

4 Scope of study

A joint stock company who wants to list on stock market has to meet many strict requirements as well as fulfill many duties by the regulations To maximize its shareholders benefit and competitive advantages, it not only meets the regulation but also makes higher effort by Investor Relation activities This study is conducted in the scope of Investor relations of listed companies It is planned to implement deep analysis on the case study of Bac Viet Steel JSC which listed on Hanoi Stock Exchange

5 Data Sources and Processing

This thesis uses both secondary and primary data sources The secondary data come from related studies on investor relations, studying books, articles, online documents and so on The secondary data also come from reports, news-letters… from Bac Viet Steel The primary data come from direct interviews with company management, staffs of Bac Viet Steel The interviews are also conducted with shareholders, analysts… in Hanoi Stock Exchange The list of interviewees shall be detailed mentioned at the

end of this thesis

6 Research method

This study is a research which applied qualitative (descriptive) method

A review of related literature/documentation is carried out to understand the concepts, the process and procedure of building and improving investor relations strategy and program of a listed company The qualitative method is

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also through interviewing relevant persons Questions will be developed and structured interviews are conducted

7 Significance of the study

This study shall contribute to the body of knowledge and understanding

on IR including: the concepts of IR, models of organizing an IR function, models of implementing IR programs and many IR tools that are widely used

in the world now It also helps Vietnamese enterprises enrich their knowledge on IR for better application in cooperation with business activities

It also could be a good reference material for leaders and the Investor Relations Office (IRO) of Bac Viet Steel

The thesis also provides the recommendations that are applicable to the current IR activities of Bac Viet Steel: the models of organizing the IR division, the way to implement IR programs in Bac Viet Steel and some suggestions to improve the IR activities in Bac Viet Steel in order to obtain the aims and objectives of an investor relations strategy and program

8 Limitations

This study focuses on Investor relation with analysis only on Bac Viet Steel case study and use data available in 2012 The study is planned to conduct within the duration from 6 months to 1 year The time constraints may have some impact on the findings and the quality of solutions

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10 Short introduction

The thesis is composed of 3 parts:

Chapter 1: Literature review of IR activities

Chapter 2: The current situation of IR activities in Bac Viet steel Chapter 3: Solutions to enhance IR activities in Bac Viet steel

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CHAPTER 1: LITERATURE REVIEWS OF INVESTOR RELATIONS

“Our view of the world is that investor relations strategy,

focused on long-term equity value, should be a force in all

corporate communications decisions.” Tom Ryan and Chad

Jacobs – Using investor relations to maximize equity

evaluation, John Wiley & Sons publishing house

1.1 The concepts of investor relations

1.1.1 The definitions

Along with the history of the development of stock exchange market, IR concepts is more and more developing, and more and more paid attentions by companies and enterprises, especially those who are quoted These days, IR is going beyond its theoretical meanings It is also an art in the modern business and management There are different definitions on investor relations and none

of them has a dominant acceptance among analysts and theorists Two of them, which are widely used as practical guides on investor relations, are:

“Investor relations is the communication of the relevant and necessary information by which the investment community can consistently make an informed judgment about the fair value of a company’s shares and securities.” - Investor Relations Society, UK (The Hong Kong Institute of

Chartered Secretaries, Guidance Note - A practical guide to good governance)

And:

“Investor relation is a strategic management responsibility that integrates finance, communication, marketing and securities law compliance to enable the most effective two-way communication between a company, the financial community, and other constituencies, which ultimately contributes to a company’s securities achieving fair valuation.” - National Investor Relations

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Institute, US (The Hong Kong Institute of Chartered Secretaries, Guidance Note

- A practical guide to good governance)

According to the above definitions, investor relations is the term used

to explain all the activities of an organization or a company communicating with all kinds of investors However, for each kind of investors, specific communication tools are designed and used for the organization or company

to gain better understanding and efficiency about the organization‟s or company‟s business strategies and activities, management, financial performance, and also the future of the organization or company This, actually, is two-way communication between the organization or company

and its investors “Investor relations is a dialogue as is as much about companies explaining their business to the investment community as it is about companies listening to the views and feedback from that very group.” –

Investor relations, a practical guide, London Stock Exchange (2010)

As the nature of investor relations is about explaining to investors and listening to their feedback, investor relations is seen as a long-term process, not an occasional activity

1.1.2 The benefits of investor relations

According to these above definitions of investor relations, the objectives of investor relations are not only about company explaining their business to all kinds of investors but also about company listening to the investors‟ feedback The benefits of investor relations are clearly defined in three aspects as following: access to capital, liquidity and fair valuation

Access to capital

The first and foremost method to measure the importance of investor relations of a company is the raised capital The two-way communication

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between the company and their investment community shall lead to ways of accessing capital The more efficient and cost-effective access to capital is, the more successful the investor relations is

Liquidity

Besides access to capital, another purpose that listed companies like to reach through investor relations is attracting liquidity from their investor relations activities, or, in other words, increasing the frequency of financial trading in investors‟ shares Once the investment community understands the company, and relying on the availability of their shares, through the investor relations, sellers and buyers can be attracted with pools as well as trade at greater frequency of their shares

Fair valuation

Furthermore, one of the chief objectives of investor relations is fair valuation of the company, which is expressed by share price Proper communication with investors shall assist company in informing their own achievements and breakthroughs It also assists company in the understanding

of market evaluation process and the status of share price in the market as well as the status of the company in the market (comparing to other share prices) Actually, a well-executed, carefully planned investor relations program can help a company to improve their ability to achieve fair value And fair market valuation is what companies should seek

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relations aim at are including four kinds of investment communities as details: institutional investors (also called fund managers), private investors, analysts, and media

1.1.3.1 Institutional investors

Kinds of typical institutional investors insist of: banks, funds (pension, retirement, mutual or hedge), financial companies, insurance companies Often, institutional investors are organizations which own the vast majority of a company‟s equity and has few restrictions in buying and selling shares; they are normally the most important investment community owing to the heavy weight

of money that they can organize and the degree to which they can invest, therefore they shall be also entitled to perform major in decision making in a company and involve in corporate governance

Key significance of institutional investors is that their investment is term; therefore they look carefully at a company‟s long-term performance, strategies and prospects

long-Institutional investors are organizations which pool large sums of money and invest those sums in securities, real property and other investment assets They can also include operating companies which decide to invest their profits to some degree in these types of assets

Types of typical investors include internal large shareholders, insurance companies, retirement or pension funds, hedge funds, investment advisors, and mutual funds Their role in the economy is to act as highly specialized investors on behalf of others For instance, an ordinary person will have a pension from his employer The employer gives that person's pension contributions to a fund The fund will buy shares in a company, or some other financial product Funds are useful because they will hold a broad portfolio of

1.1.3.2 Private investors

Normally, the most of investment shall come from institutional investors with long-term view and complicated requirements Instead, private investors shall be engaged in shorter-term investment

Private investors - wealthy individuals looking for a profitable return in a viable business venture, also known as business angels or angel investors or informal investors - will also offer networking opportunities and business connections or sometimes take on a management role in their invested company

“Private investors - wealthy individuals looking for a profitable return in a viable business venture, also known as business angels or angel investors - will also offer networking opportunities and business connections or sometimes take on a management role in their invested company” Nowadays, an increasing numbers

of private investors gather into angel networks (or angel groups, or sub-set of private investors) to share information, research, and analysis; and also pool their money to their mutual portfolio

Mostly, angel investors usually buy smaller sums of shares and provide necessary liquidity Especially, for business start-up or small companies,

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where it is pretty hard to attract institutional investors, it is angel investors that own the vast majority of a company‟s equity Private investors are any members who buy and sell shares in listed company The decision making of this buying or selling may be simple and be without any consideration or advice from stock-brokers However, the role of stock-brokers to private investors is increasingly important as stock-brokers can give professional advice, latter‟s recommendation, or, under private investors‟ needs, structure private investors‟ investments or portfolio, and also make some certain decisions on private investors‟ behalf under an agreement between private investors and stock-brokers

Private investors can also be past and present employees and their families of a listed company itself by keeping/converting share options or buying via company-supported program Although most companies apply certain restrictions on buying and selling these types of shares, most of these shares shall become tradable

Generally, the participation of private investors and private brokers can

be significant in pushing demand for shares, and then, enhancing the liquidity

of the shares Therefore, private sections should be an important part in a company‟s comprehensive investor relations program

1.1.3.3 Analysts

Not kinds of investors but playing an important role in the market are analysts They actually are the “bridge” between the company and its investors of all kinds Analysts are the one who forecast a company‟s performance and prospects, and set market expectations about a company‟s potential, efficiency and future growth, and, most importantly, they shall

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publish their opinions and analyses on a company “Typical areas covered in analyst reports are as below:

- Description of a company and its activities

- Comparisons with peers and read-across implications of peer activity

- Opinions and analysis on how the company and management are performing

- Opinions and analysis on the wider macro influences affecting the company

- Forecasts of financials including full income statement, cash flow and balance sheet (or summaries thereof)

- Expectations (including a target share price)

- Valuation of the company using a variety of metrics (discounted cash flow and peer-group multiples are the most common)

- A recommendation to the reader (buy, sell or hold)

- Forthcoming catalysts and expected news-flow that support the recommendation.”

Source: Investor relations, a practical guide, London Stock Exchange (2010)

As much as the significance of the analysts‟ voices, there are many factors affecting their opinions, such as: sector that company is in, company‟s market capitalization, investment community, trading volumes and stock‟s liquidity

1.1.3.4 Media

Warren Buffett has insisted: “It takes 20 years to build a reputation and five minutes to ruin it” This statement has mentioned the broad

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importance of media to reputation of any organization or company For all businesses and sectors as well as all types of organizations or companies, efficient communication with press and media is more and more significant Media here are understood: print (newspaper, newsletter and magazines), broadcast (television, radio) and internet-based (on-line) new media (see the figure 1.1)

Figure 1.1: Media matrix

Source: Investor relations, a practical guide, London Stock Exchange (2010)

Since seeing the significant role of media, the relationship-building program with the media is also of much importance A good relationship with the media shall help the company have a bright picture with the public

There are various ways of building relationship with the media, such as:

- One-to-one meeting: with public-relations professional who has a kind relationship with relevant journalists and press The company should be very well-prepared for unexpected issues mentioned

- Releasing key announcements (new business lines, new contracts, Board appointments…) to the market

Communication with the media and press is like communication with master communicators This can be a rewarding or a paying experience In all cases, the company should be in good preparation and understanding Then whether positive or negative news released, the company should always show the openness and comfort on communicating with the media

In general, dealing with all kinds of stakeholders is never an easy work

An investor relations program shall help a company in detailing the characteristics and significance of the three principle investor relations audiences: investors (institutional and private), analysts and the media Figure 1.2 shall show the model and process of investor relations in a company

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Figure 1.2: The model and process of investor relations

Source: Investor relations, a practical guide, London Stock Exchange (2010)

1.2 The investor relations team

In order to generate a proper investor relations program, it is vital to form an investor relations team and assign responsibilities In practice, an investor relations team shall include both internal members of a company and

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external forces, they are: company management, financial PR firm, and investor relations consultancies

1.2.1 Company management

Company management is the most important internal force influencing

on an investor relations program of a company Its decisions and actions shall affect the success as well as the failure of an investor relations strategy Furthermore, all kinds of shareholders also pay a lot of attention on the operation of a company management Investors, especially institutional investors are eager for meeting and keeping an open communication with company management to understand what they are really invested in

Normally, it is Chief Executive Officer (CEO) and Chief Financial Officer (CFO) who shall be responsible for the majority of investor relations activities of a company Their decisions shall get advice and information from the company‟s consultants, and most of cases the Investor Relations Officer (IRO)

Andrew Buchanan, Fund Manager - Octopus Investments has

concluded on the role of company management: “Essentially, as investors we are backing the management team and their ability to deliver their strategy and provide returns for their investors It is equally vital that the Non- Executives are high calibre, because shareholders need them to challenge and guide the Executives Investors will want to have open lines of communication with both the Executive and Non-Executive Directors and companies should embrace this as part of their investor relations strategy, for example by a Non-Executive offering to talk directly to shareholders without the Executives present.”

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1.2.2 Financial Public/Press relations (PR) firm

A financial PR firm, usually called as a financial communication adviser, shall be responsible for bringing the picture of company and its prospects to the shareholder community A financial PR firm shall work together with other kinds of advisers of the company (investment bank, auditor, legal consultant…) in communicating the company‟s messages to all kinds of its investors and stakeholders The duties of a financial PR firm are

as following:

- “Communications strategies

- Business and financial media strategy and relations

- Financial calendar reporting

- Drafting of regulatory news releases and financial communication presentations

- Peer monitoring and analysis

- Gathering analyst forecasts and establishing consensus forecasts

- Corporate governance issues

- Crisis communications issues

- The in-house corporate PR function”

Source: Investor relations, a practical guide, London Stock Exchange (2010)

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1.2.3 Investor relations consultancies

Investor relation consultant focuses on specific services of investor relations such as market studies, share register analysis, support of in-house

IR teams… An IT consultant can be a corporate broker, registrar or financial

PR firm Services provided by an investor relations consultant are: share register analysis and efficient targeting, roadshows, qualitative studies, in-house coaching and support, and shareholder communication materials

Share register analysis and efficient targeting: the trading activities are more and more complicated, therefore the share register shall indicate the real shareholders, and stocking trading and lending accounts Share register analysis shall help the company in understanding who really owns its shares, who really decides the investment and who really has the voting rights Under this analysis, and together with other relevant analyses, the IR consultant shall then make an efficient targeting on institutional investors through company‟s meetings

Roadshows: after having the share register analysis and efficient targeting,

and due to contact relationship management capabilities of the company, the IR consultant shall assist the company in organization of roadshows (a series of meeting with shareholders)

Qualitative studies: qualitative studies and surveys shall be undertaken

to ascertain perception, attitude, acclaim and cognition of a company‟s stock

IR consultant also supports the company in interviewing a cross section of overweight, underweight and absent shareholders to figure out and understand their feelings, and then offer trading and other strategic outputs

In-house coaching and support: whereas most large companies

recruit reputed investor relations professionals for their in-house investor relations sector, some small and medium companies with limited budget

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cannot afford their own investor relations department In these cases, investor relations responsibilities shall be put in company finance or administration department IR consultancy can provide the company with:

- Certain recommendations to a specific corporate action

- Support on retained basis

- Coaching and support IR personnel with no or little experience

Shareholder communication materials preparation/provision: IR

consultant can also support by their shareholder communication materials preparation, such as: annual report, announcement, website content… IR consultancy shall advice company management on the content, timing and placing channel of such materials under local and national strict legal and regulatory framework Further, IR consultant also helps on market reaction forecast to company announcements and efficient position of the company

1.3 The procedure of developing an investor relations strategy and program

Realizing the significance of investor relations, it is vital to build and investor relations strategy and program This procedure consists of: figuring out the company‟s case (company‟s investment proposition, forming investor relations team, investor identification and attraction, understanding market expectations and forming compelling messages), and deciding which tools to use to communicate with investment community (press release, website, annual report, social media, meeting, roadshow, conferences and so on)

1.3.1 Investment proposition and setting goals for IR

The elements of the process to formulating investment proposition include: critical analysis on strengths and weaknesses of the company, proposition factors (complication, size and market sector… to look for further

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investment in long-term/short-term), dividends and capital growth (the company‟s future, paying dividend plan, appearance of long term plan to investor return, short-term/medium-term and long-term benefits of shareholders‟ ownership, rates of growth in revenue and dividend earnings, and potential exit for investors), and the characteristic of easy understanding and communicated to targeted and segmented shareholder community

Not simply a theory, IR is also an art that helps company in obtain more effective communication and credibility with its investment community, and obtain their goals when building and improving an IR strategy and program Below are possible goals that should be common to the IR strategy and program:

- Rise the trading volume and liquidity of the company

- Maintain or change the shareholders base (shareholders structure)

- Realize the security prices that reflects a combination of intrinsic, fair value and upside potential (market efficiency)

- Obtain institutional or private investor commitment, or both

- Increase market support

- Cover financial more on media

- Increase the numbers of research/analysis following the company, sell-side analysts coverage

Depending on its capacity, resources and different terms of development, the company shall set proper goals of IR to be achieved

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1.3.2 Forming investor relations team

As mentioned in part 2.2 of this chapter, the investor relations team comprises of three elements: company management, financial PR firm, and investor relations consultancies According to the scope and size of the company, as well as the level of market development, specific elements of investor relations team shall be focused and prior more than the others

1.3.3 Identifying, attracting and retaining investors

Identifying investors can be conducted by legal means or technical means Legal means shall identify shareholders through notification of threshold crossing, a central securities depositary, and analysis of voting results Technical means shall identify shareholders through free shareholder techniques, fee-based tools, and financial intermediaries

After finishing the investors identification, the company then conduct the duties of attracting and retaining them Steps to start attracting and retaining investors are: intelligent targeting (including meeting with hedge funds and limitation of institutional targeting), and the “seed, harvest and lock” approach to investor relations

1.3.4 Knowing market expectations and forming compelling messages

After understanding and segmenting its shareholders, the company then figures out market expectations The company is suggested to emphasize on the form and content of market expectations

The next step is forming compelling messages Seven aspects of compelling messages are financial and strategic messages, outlook, investor value creation, mergers and acquisitions, corporate governance and internal

Table 1.1: IR messages by theme

Source: Anne Guimard, Investor relations – Principles and best practices of financial communications, Palgrave Macmillan publishing house (2008)

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1.3.5 Developing financial calendar

While developing a financial calendar, the company should pay attention on: personnel that prepare the financial calendar, the content and publication of financial calendar, and the “silent” periods Normally, the publication date of annual reports in advance should be considered as the beginning of the company‟s financial calendar

1.3.6 Using investor relations tools

As long as having an overall picture of investor relations, the company

as to select and implement investor relations tools Depending on the scope and size of the company, as well as the level of market development, the company shall choose some of below investor relations tools to apply to its own investor relations program The investor relations tools can be: all kinds

of meeting, company announcements, annual reports and other tools (press release, shareholder letter, financial advertising, rosdshows and reserve roadshows, conference and conference calls, factbooks, fact sheets, disclosure policy, visuals, slideshows and presentations, and website, blogs and social media) These communication tools should be consistent designed for long-term outlook, and also comply with legal regulations, allow for productivity gains, need low maintenance, and meet the expectations and target investment community‟s requirements

1.3.6.1 Meetings

There are a lot of proper occasions which shall provide opportunities for the company management to meet with its shareholders, investor relations team, analysts, and media… Some kinds of meetings are: annual general meeting, public meeting, and one-to-one meeting

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Annual general meeting: complying with legal framework, annual

general meeting plays a key role in shareholder democracy Annual general meeting shall help the company communicate fully with its investment community Together with annual general meeting, the company is suggested

to also prepare any new information included in the CEO‟s speech and a strategic point of view

Public meeting: also called an information meeting, is arranged in the

company‟s home market, for example, in an IPO, an earnings release, a financial transaction, or for large numbers of investors In addition, the company can invite the media, press, and analysts to this kind of meeting The main advantages of public meeting are: the attendees can see company management in person, and the media (TV and radio) are allowed to deliver images and sounds

One-to-one meeting (also called cornerstone meeting) is usually

arranged by third-party This includes:

- One-to-one meeting with institutional investors: this kind of meeting

is often for potential and new shareholders, and arranged by corporate broker and located at institutional investor‟s office, in order to give the company‟s introduction and understand shareholders‟ demand

- One-to-one meeting with private client broker: as the private client broker is able to affect on the stability of the company‟s share price, the company‟s financial PR firm can arrange individual meetings with them

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- One-to-one meeting with sell-side/buy-side analysts (sector specific analysts or generalists): this shall develop analyst coverage in addition to that of the company‟s house broker

- One-to-one meeting with press: background briefing, which provides journalists with knowledge of the company and overview

of competitive market

1.3.6.2 Company announcements

Company announcements help keep the company‟s shareholders well informed of their affairs This shall support to maintain fair and transparent markets The content of company announcements can be: periodic news flow, briefings, regular publication, ad-hoc basis on new developments or new products, and inside information (information which requires closure to the public) Any company announcements should be truthful, exact and not influencing the import of the information The time of company announcements is whenever there is information considered as inside information of the company, it is vital to disclose this to the market without delay The way to announce is that disclosed information should be available

to everyone The company should make sure that disclosed information be accessible to all, not selective disclosure

1.3.6.3 Annual reports

Annual reports are now considered as one of the key activities in any company‟s investor relations program Because of its significance, annual reports should be seen as the first one-to-one meeting between the company and its investment community, providing shareholders with the company‟s strategic details of the results information Therefore, both the content and the

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publication and distribution process of annual reports should be carefully regarded

The content of an annual report has to include:

- A description of the business: the context, the overview of strategy, performance and operation

- Organizational structure chart

- Key governance information (assessing risks and certainties, also the SWOT analysis if needed)

- Main financial figures with detailed explanatory notes (balance sheet, financial statement, other audited reports…)

- Future results and prospects (if any), etc

Nowadays, most of the companies use both the online and offline distributions channels to post their annual reports to all shareholders Further, online format is paid more and more attention of investment community as its characteristics of duration, comfort, easy approach and economy

1.3.6.4 Other investor relations tools

Press release: is used for scattering the company‟s noted information

It should be strongly structure, properly written, relevant with other releases and other investor relations tools, and content-rich information

Shareholder letter and shareholder guide: providing the (retail)

stockholders with the development, stock-market data, some major events, and financial transactions (if any) of the company It is posted about three times per year via mails, emails or financial advertising

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Financial advertising: widely used among medium-sized companies,

financial advertising is used to attract retail investment community and build the company‟s corporate reputation Recently, financial advertising is posted

on online banner of high-viewed websites with hyper links to connection, especially well-known financial websites

Roadshows and reserve roadshows: particularly, roadshow is a series

of meeting usually arranged by a corporate broker to present financial transactions and deals; whereas, generally, roadshow is any-time event the company management goes to meet with the shareholder community of the company In opposite, reserve roadshow, arranged by an investment BVG, is the event that a group of companies goes to visit a city or town for meeting with investors or other several companies in one day

Conferences and conference calls: arranged by investment banks or

corporate brokers, conference is the event of company presentations to their customers and investors, and also the event that customers and investors can meet with companies management during briefings or break-time or tea-break And, conference calls, also considered as one kind of in-person meeting, is a tool that helps company management talks to their shareholders, analysts, or media Conference calls are considered being cost-saving, time-saving and planning Both conferences and conference calls are mostly designed for the contact with retail shareholders

Factbooks, fact sheets: designed every 5 to 10 years, factbook is a

document collecting financial information of the company (together with the overview of industry, sector, business, macro-economic and micro-economic environment that the company is in) Not for long-term period like factbook, fact sheet is a well designed and presented one-page document of the

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company Its content is about the investment case, key facts and figures and significant events (for example: changes in CEO, mergers & acquisitions, takeovers…)

Disclosure policy: this tool is mostly used for internal communication

of investor relations This kind of written document is for keeping the company‟s staffs well informed of regulations, business culture, markets, industry, rules and objectives of investor relations policy

Visuals, and presentations: Not only transforming audiences‟

perceptions and viewpoints on the business, and executives measurement, effective presentations with visual effects can move the company valuation and support of documents in various kinds of meetings

Website and social media: the role of website and social media (blog,

facebook, twitter, wordpress…) is more and more important In some cases, website and social media is the first touch point between an investor and the company Website is considered more of an advertising tool, whereas social media is regarded as a PR tool It requires the wisdom and creation in using these tools for supporting the investor relations

1.3.7 Improving investor loyalty and retention

One of purposes of an investor relations program is improving investor loyalty and retention In this aspect, investor relations is considered as a shareholder relationship management Ways to this improvement are extracting value from investment community base and combining financial and corporate communications strategies The company can conduct to extract value from investment community base through: cost savings and efficiencies, increased share loyalty, and brand loyalty However, without support from other duties and forces, investor relations alone cannot carry the duty of

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enhancing investor loyalty and retention With the purpose of informing, educating existing investors, and persuading them to rise their holdings, it is necessary for IR to be supported by: an attractive investor remuneration policy (reward dividends, bonus shares…), bright financial performance, and the investors‟ advocate of brands, products and services of the company

1.3.8 Managing negative communication and crisis

One of significant aspects of a comprehensive investor relations program is how to deal with negative communication and crisis Kinds of crisis can be financial crisis, business crisis, and external crisis Principally, every company should operate a media policy and plan, and communicate it to their people so that they can understand and follow the rules of dealing with the media, including what to do when negative communication and crisis happens

In order to deal with negative communication and crisis, some steps are considered to take, such as: an early-warning system, issues management, putting together in a team of managing negative communication, determining the messages and information, and taking measures The other way is to participate in press relations and investor relations forces and strengths However, the key foundation of managing crisis is trust the company earned from its investment community and market The company should at any time build a strong relationship with financial markets that is based on trust, credibility, consistency and transparency

2.1.1 Bac Viet Group Structure

Bac viet Steel has subsidiaries as follow:

Table 2.1: Bac viet Steel subsidiaries

Bacviet Structure Steel Building Company

Limited (BSSB)

Manufacturing industrial steel structures, pre-engineered steel buildings

Bacviet Technology J.S.C (BVIT) Producing and trading of black

and galvanized welded steel pipes, mold and Injection Plastics

Bac Viet Metal Joint Stock Company

(BVM)

Manufacture of metal components, mechanical fabrication, treatment and coating metal, Logistics services

Bac Viet Industry Joint Stock Company

(BVI)

Manufacturing steel and equipments, real estates service

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Table 2.2: Bacviet Steel has associating companies

Bacviet Trading Joint Stock Company

(BVT)

Producing and trading office furniture, household furniture and school furniture

Hannel Urban Development and

Construction Joint Stock Company (BVXD)

Construction and real estate

Bacviet Furniture Company Limited (BVF) Distribution of steel pipes and

furniture in Trung Bo and Tay Nguyen provinces

Hung Viet Investment and Technology Joint

Stock Company (BVH)

Consultancy on investment, consultancy on development and management of projects on energy recycling, education, training, agriculture and commerce