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

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 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 Necessity of the thesis Research aims and objectives Research questions Scope of study Data Sources and Processing Research method Significance of the study Limitations Expected Results 10 Short introduction CHAPTER 1: LITERATURE REVIEWS OF INVESTOR RELATIONS 1.1 The concepts of investor relations 1.1.1 The definitions 1.1.2 The benefits of investor relations 1.1.3 Targeted audience of IR 1.2 The investor relations team 15 1.2.1 Company management 16 vi 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 vii 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 71 APPENDIX 78 viii 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 ix 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 x 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 IR Investor relations IFRS International financial reporting standards HNX Hanoi stock exchange PBT Profits before tax PR Public relations SSC State securities committee xi 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 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 ii 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 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 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 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 iii INTRODUCTION 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” ... 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? ?? Research aims and objectives... 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. .. 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