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” company should pay much attention on conference calls after press releases, before information meetings, and especially in time of crisis Disclosure policy On preparing and publishing the disclosure policy, the company shall have to pay attention to the following issues: - Targeted audience - Authorized spokemen - Rules and responsibilities in behavior and communication of employees - Type and form of disclosed information - Principles especially for sensitive information - Behaviors in silent periods, black-out periods… Bac Viet Group should also consider the publication of this disclosure polity in writing and on its corporate website (with limited access) 3.6 Improving investor loyalty and retention For the case study of BVG, the company is recommended to take advantages of cost saving and efficient way to extract value from their investors BVG should promote online investor communication, and educating their investors to be devoted followers Furthermore, BVG should also apply other financial strategies to support for their investor relations support, such as: bonus shares, timely returning of money and bonus, increased dividends, strong financial performance themselves and easy access to BVG‟s products, services on 65 certain and specific terms, forming and maintaining investment community clubs, investors‟ interests program, and so on 3.7 Managing negative media communication First and foremost, BVG should insist in building their own reputation and credibility Once any information is released, it must be truly informative, objective and constructive; and it must be accessed easily and rapidly by shareholders and stakeholders before the media, the press, the analysts or the markets Secondly, BVG is recommended to formulate alert systems, policies to deal with crisis communication, crisis management special tactics team… Thirdly, BVG is suggested to be involved in press relations or investor relations forces or industry associations, such as: VCCI‟s enterprises associations, Vietnamese steel associations, Sao Vang Dat Viet (Vietnamese yellow star), Fast 500… 3.8 Chapter review This chapter includes recommendations/ suggestions to improve Investor Relations activities of Bac Viet Steel Implement Investor Relation program in BVG includes: Forming IR team Indentify, attracting and retaining shareholders Forming compelling message by understanding the stock market Developing financial calendar Using IR tools Improving investor loyalty and retention Manage negative media comunication 66 CONCLUSION IR includes both mandates regulated by laws and proactive activities of companies to promote the image of company and its stock to investor communities In order to build up an effective IR strategy and program, models of IR activities to apply to Bac Viet Steel which listed in HNX with stock code BVG, which will contribute significantly to the overall strategy of Bac Viet Steel in the near future Therefore, it is very necessary to a research of IR activities theories to apply into IR activities in Bac Viet Steel in order to make it more professional and more efficient Therefore, the thesis “Developing and improving investor relations – The case study of Bac Viet Group” goes into details to resolve this issue With the order approach, the chapter covers the theories of IR activities In this chapter, the definition, objective, audience of IR is clearly defined After that, the models of organizing IR division, models of implementing IR programs are reviewed to find out the suitable one to apply in to listed company Besides, all the widely used IR tools are also presented in this chapter Chapter analyses details of the current IR activities of Bac Viet Steel Combined with the theories in the chapter 1, the current situation of BVG IR activities are analyzed carefully to find out the weaknesses and the strengths Some of the strengths of Bac Viet Steel are that Acknowledgement of chairman, A relatively strong IR team; IR section in the corporate website 67 However, Bac Viet Steel‟s IR activities haven‟t been out of the context of IR activities in Vietnam – which is in the first stage of development and all of the IR activities lack strategy The thesis also points out recommendations for Bac Viet Steel to enhance IR activities In the chapter 3, the author presents how to apply the IR models in the actual situation of Bac Viet Steel and give some overall suggestions to improve IR activities In this chapter, the author also presents in details how to apply a suitable model of implementing IR program in Bac Viet Steel 68 REFERENCES Anne Guimard (2008), “Investor relations: Principles and International Best Practices of Financial Communications”, Palgrave Macmillan, Newyork Bruce W Marcus (2005), “Investor Relations in a Dynamic World”, John Wiley & Son, Inc., Hoboken, New Jersey Michillen Chang, Patrick Murphy, Marvin Wee (2009), “An investigation into impact of investor relations on the profitability of director share trading”, The university of Western Australia Millicent Chang Li Yin Hooi, Marvin Wee, “The impact of investor relations disclosure on analysts’ forecast”, The university of Western Australia Qualvin advisory Pte Ltd (2006), “The senior executive guide to successful investor relations in Asia” Reuven Lehavy, Richard G Sloan (2005), “Investor recognition and stock returns”, University of Michigan Sayjda Talib (2007), “Investor relations and expectation management”, Lancaster University management school Thomas M.Ryan, Chad A.Jacobd (2005), “Using investor relations to maximize equity valuation”, John Wiley & Son, Inc., Hoboken, New 69 Jersey The Nasdaq stock market, “The strategy and practice of investor relations”, The Nasdaq stock market 10.Circular 09/2010 of Ministry of finance: instructing information disclosure with public companies 11.Annual report 2012, Bac Viet Steel JSC 12.http://cafef.vn/ 13.http://www.ciri.com.vn/Home/default.aspx 14.http://www.niri.org/ 15.http://www.hnx.vn/ 16.http://vcbs.com.vn/ 70 APPENDIX Financial figures of BVG BVG Consolidated Balance sheet (short format) 71 Items 2011 CURRENT ASSETS Inventories TOTAL ASSETS CURRENT LIABILITIES TOTAL LIABILITIES AND SHAREHOLDE RS' EQUITY SHAREHOLDE RS' EQUITY Share premium Retained earnings 2010 2009 2008 283,060,280,099 283,423,034,817 181,775,752,174 132,948,647,055 127,722,229,483 130,831,836,540 72,346,894,220 54,886,861,752 471,302,996,737 466,543,986,560 298,522,843,448 171,007,918,899 282,090,032,296 256,596,751,290 155,990,552,745 100,166,983,856 471,302,996,737 466,543,986,560 298,522,843,448 171,007,918,899 123,252,288,591 122,486,162,248 94,381,189,731 58,764,190,899 16,503,370,800 16,503,370,800 4,123,370,800 2,098,936,381 3,269,945,901 18,812,353,274 122,611,584 BVG Consolidated Income statement (short format) Items NET SALES GROSS PROFIT OPERATIN G INCOME PROFIT AFTER TAX 2011 2010 2009 2008 738,986,004,448 616,831,901,807 428,577,677,901 317,794,011,653 58,555,041,825 43,081,954,849 47,848,088,434 29,898,588,636 1,635,604,833 2,282,405,009 19,929,800,685 12,575,652,732 962,626,373 2,039,203,863 18,792,595,311 12,484,126,718 72 BVG Consolidated Cash Flow Statement (direct) Items 2011 2010 2009 2008 NET CASH FLOW FROM 75,002,843,041 OPERATING 18,834,761,442 57,182,249,877 93,736,441,179 ACTIVITIES Cash from operating activities 894,209,353,80 518,871,603,59 487,209,773,55 321,369,048,35 Cash paid for suppliers 828,719,273,93 551,948,396,85 540,004,063,89 232,252,653,27 Cash paid for employees -8,550,462,771 -3,565,835,549 19,248,698,040 11,844,803,710 Interests paid -7,544,917,183 -9,055,035,201 48,404,965,782 20,126,509,627 Income taxes paid -892,977,035 -2,636,260,155 -192,747,586 -3,136,161,570 Cash from other operating 12,056,739,396 40,525,071,728 9,492,271,908 7,254,446,025 activities Cash paid for other operating -5,610,965,748 27,834,939,853 30,022,954,851 34,146,295,209 activities NET CASH FLOW FROM 7,688,062,272 INVESTING 15,246,851,789 74,977,544,521 38,629,451,006 ACTIVITIES Purchases of fixed assets -4,537,901,986 -2,159,705,510 -1,128,497,619 75,637,735,379 Proceeds from disposals of fixed assets 0 123,809,524 219,047,619 Cash paid for purchasing debt instruments 0 0 Cash received from selling debt 10,451,000,000 0 73 instruments Loan granted to joint -9,980,515,052 -1,681,742,273 venture/subsidiar 11,821,788,996 36,735,843,000 y Cash from the investments in other entities Interests, dividends, profits 1,112,839,193 received 9,000,000 189,705,910 133,287,980 10,279,254,545 NET CASH FLOW FROM 142,807,500,62 146,265,698,93 9,906,522,645 FINANCING 77,308,521,139 ACTIVITIES Proceeds from issuance of shares Purchases of equity securities 8,965,947,400 36,380,213,052 37,415,303,800 36,533,053,736 0 0 Proceeds from borrowings 501,551,066,06 448,721,920,37 306,603,470,57 68,728,587,671 Repayments of borrowings 500,610,490,82 326,394,632,80 197,753,075,44 157,217,717,46 4 Cash paid to financial leasing debts 0 0 Dividends paid 15,900,000,000 25,352,445,082 NET CASH FLOW 10,647,706,222 13,899,806,747 5,382,384,174 24,175,090,586 CASH AND CASH EQUIVALENTS 29,932,374,569 19,283,016,149 5,382,384,174 AT BEGINNING OF YEAR FOREIGN EXCHANGE GAIN/(LOSS) ON CASH AND CASH -35,499,566 1,652,198 74 825,228 EQUIVALENTS CASH AND CASH EQUIVALENTS 5,721,784,417 29,932,374,569 19,283,016,149 5,382,384,174 AT END OF YEAR BVG Financial Ratio Annual growth Items 2011 2010 2009 2008 TOTAL ASSET GROWTH EQUITY GROWTH 0.0102 0.0063 0.5628 0.2978 0.7457 0.6061 NET INCOME GROWTH SALES GROWTH EPS GROWTH -0.5279 0.198 -0.5279 -0.8915 0.4393 0.5053 0.3486 Profitabili ty 2011 0.002 0.0078 0.0013 2010 0.0044 0.0166 0.0033 2009 0.063 0.1991 0.0438 2008 0.073 0.2124 0.0393 0.0014 0.0792 98.7213 98.7213 0.0033 0.0698 209.1288 209.1288 0.0489 0.1116 0.0402 0.0941 2,684.66 2,191.28 962,626,373 2,039,203,86 18,792,595,3 11 12,484,126,7 18 12,133.30 98.7213 0.002 0.0078 12,025.31 209.1288 0.0044 0.0166 12,839.19 9,849.09 0.063 0.1991 0.073 0.2124 Profitability Items ROA ROE NET MARGIN OPERATING MARGIN GROSS MARGIN EPS (TTM) BASIC EPS (TTM) STRICT NET INCOME (TTM) BOOK VALUE EPS ROA (TTM) ROE (TTM) 75 -0.1194 0.1026 Capital structure Items LONG-TERM DEBT/EQUITY DEBT RATIO 2011 2010 2009 2008 0.4732 0.7223 0.6492 0.7204 0.5001 0.6807 0.1758 0.6462 2.762 2.7441 2.1529 1.8804 SHAREHOLDER'S EQUITIES/TOTAL RESOURCES 0.2615 0.2625 0.3162 0.3436 FIXED ASSETS/TOTAL ASSETS 0.3535 0.3216 0.2906 0.2091 EQUITY MULTIPLIER 3.8239 3.809 3.1629 2.9101 LIABILITIES/SHAREHOLD ER'S EQUITIES LIABILITIES/TOTAL RESOURCES Efficiency Items INVENTORY TURNOVER RATIO ACCOUNTS RECEIVABLE TURNOVER RATIO AVERAGE COLLECTION PERIOD FIXED ASSET TURNOVER RATIO TOTAL ASSET TURNOVER RATIO CURRENT ASSET TURNOVER Efficiency 2011 2010 2009 2008 5.7859 4.7147 5.9239 5.79 5.8931 6.7881 6.2314 4.5773 4.4352 4.1117 4.94 8.8872 1.568 1.3221 1.4357 1.8584 2.6107 2.1764 2.3577 2.3904 76 INVENTORY CONVERSION PERIOD RECEIVABLE CONVERSION PERIOD PAYABLE CONVERSION PERIOD CASH CONVERSION PERIOD Liquidity Items NET WORKING CAPITAL NET WORKING CAPITAL/TOTAL ASSETS CURRENT RATIO QUICK RATIO CASH RATIO 2011 2010 2009 2008 970,247,803 26,826,283,5 27 25,785,199,4 29 32,781,663,1 99 0.0021 1.0034 0.5507 0.0203 0.0575 1.1045 0.5947 0.1167 0.0864 1.1653 0.7015 0.1236 0.1917 1.3273 0.7793 0.0537 (Source: VIETCOMBANK SECURITIES) 77 APPENDIX List of interviewees: - Mr Tran Anh Vuong – Chairman/CEO of Bac Viet Steel - Mrs Ta Thu Hang – Chief Accountant and Official Spokesperson of Bac Viet Steel - Mrs Vu Thi Thu Ha – Personnel and Administration Manager of Bac Viet Steel - Mr Dang Duc Dung – Independent member of Board of Director - Mr Nguyen Tuan Duong – Analyst of Beta securities company 78 APPENDIX QUESTION FOR INTERVIEW Part 1: About the Company Name of the Company? When did the company start? Who is the owner of the company? Who is the Chair man? CEO? IR officer? Member of IR team? Describe the company‟s business concept? What is the company‟s strategy for the future? What are Company‟s vision and mission? Can you describe the structure of the organization? Which different departments you have? How many employees you have? 10.What products are you producing? 11.What are annual revenue and profit? Part 2: IR What you understand about IR? How about others Does your Company have IR activities? Please list How long have your Company join in IR activities? What is the company‟s view on Investor Relation (IR)? Where is IR budget from? How much is it annual? Or total? What you think are the benefits of IR? Do you think IR could help you improve your strategy? Do you see any obstacles for your company when it comes to working with IR? What you expect about IR activities? 79 ... 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,... 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... sell a day just only 7057 share equals 22,679,000 VND Even it recovered, but it is still very low quantity The liquidity of BVG is very low The shareholders almost may not sell when they need It