[22 June 2009]
Singapore-based fund managers will pay a premium for companies with good investor relations

89% of respondents say they will pay a quantifiable premium for good IR

Singapore, 22 June 2009 – A study on Singapore-based fund managers has found that 89% of respondents are willing to pay a quantifiable premium for companies with good Investor Relations (IR). About 66% of respondents are willing to pay a premium of up to 15%, while another 24% are willing to pay a premium of more than 15%. A 15% premium translates into S$75 million for a mid-cap company with a market value of S$500 million. The joint study by the Singapore Management University (SMU) and the Investor Relations Professionals Association (Singapore) (IRPAS) is the first such study examining the perception of Singapore-based fund managers about the IR standards in SGX-listed companies.

Institutional investors are important stakeholders of listed companies. And IR is their gateway to a company. “Research has found that a good IR programme can have a positive impact on corporate image, and there is a clear correlation between image and share price,” says Principal Investigator of the study, SMU Associate Professor of Corporate Communication Practice, Dr Mark Chong. “Our findings show that companies can and should invest much more in Investor Relations than they currently do, especially when doing so will result in a better valuation of their stocks,” he explains. The study found that this is particularly true of small- and mid-cap companies, where good IR is more of a challenge given limited resources and experience.

“The results of this study confirm what we have always been advocating – that investors do value good IR, and that when compared to the more developed western markets, Singapore companies still have room for improvement in meeting IR expectations of global fund managers,” says IRPAS General Manager, Joseph Chia. “To help companies understand and improve their IR standards, IRPAS will continue to roll out courses on Investor Relations that are customised for Asian companies,” he adds.

Respondents had also indicated that the quality they valued most was the credibility of the management and IR officers. “This drives home the point that good IR requires a company to build credibility and trust over the long term,” says Chia. “It is not just an ad-hoc activity that a company engages in only when it has good news to share or when it needs to raise funds,” he says.

Based on the study, the IR practices of SGX-listed companies received an “average” rating. The 30 component stocks of the Straits Times Index, however, fared better. Among the large-cap SGX-listed companies, institutional investors rated the following as having the best IR: SingTel, CapitaLand, Singapore Airlines, Keppel Corporation, with DBS Group and StarHub in a joint 5th position. Among the small- and mid-cap companies, the top-rated companies were: Olam International, SingPost, with Ascendas REIT, Boustead Singapore and Ezra Holdings in a joint 3rd position.

The study was conducted in April 2009 using an online questionnaire which was sent to fund managers based in Singapore. The findings are based on the responses of 38 fund managers representing 27 institutional investors with estimated equity assets under management in Asia totalling over US$30 billion.

SMU and IRPAS plan to conduct the survey regularly so as to tap the pulse of institutional investors, and gather valuable feedback for listed companies for their IR approach and strategy.

About the Investor Relations Professionals Association (Singapore)

The Investor Relations Professionals Association (Singapore), or IRPAS, is an association set up in 2006 by leading investor relations (IR) practitioners with the primary objective of promoting awareness of, and best practices in IR. IRPAS is run by IR Officers (IROs) for IROs and strives to help all IR professionals to improve their IR through education, training and social networking events. In 2009, IRPAS embarked on a new programme, the IRPAS Seminar Series, in which IRPAS plans to organise IR training seminars that are tailored to the Asian market. In addition, IRPAS also facilitates the sharing of IR knowledge and best practices by working with prestigious institutions and partners to provide research and information for its members. For more information on IRPAS activities and membership details, please go to www.irpas.com.