good practices for analyst presentation · good practices for analyst presentation ... a pyramid...

Good Practices for Analyst Presentation

Investor Relations Training: Intermediate Module

24 September 2013

CONTENTS

How to develop an effective presentation

Importance of analyst presentation

Four steps to best practice presentation

Tips & presentation samples

Managing analyst presentation

Analyst presentation timeline

Delivering presentation & dealing with questions

Value of feedback

1

CONTENTS








Value of feedback

2

Companies with outstanding IR practices tend to have higher premium and lower cost of capital

3

Singapore Management University

“What premium are you willing to pay for a company’s share if it has exemplary IR?”

Survey of 38 fund managers

University of Zurich Range of cost of equity advantage for companies with good IR over those with poor IR Research from University of Zurich

1.8% 2.4%

11% 18% 34% 13% 24%

0%

15%

10%

>15%

5%

% of Respondents

Pre

miu

m %

Independent research by the world’s leading universities confirm that companies with outstanding IR practices tend to have higher premium and lower cost of capital

Investor Relations can be defined as:

A strategic management responsibility

that integrates finance, communication,

marketing and securities law compliance to

enable the most effective two-way

communication between a company, its

shareholders, the financial community,

and other constituencies, which ultimately

contributes to a company's securities

achieving fair valuation and lowering its

cost of capital

5

A crisp and clear investment thesis/story is important

COMPANY

Annual report

Company profile

Analyst presentation

News Release

Website

Buy-side analysts

Sell-side analysts

Equity sales

Investors

− Shareholders

− Bondholders

Creditors

The Investment Thesis

Your company’s angle; a way to differentiate between investment choices

Similar to good consumer brand management

– Clear Brand Message

– Effective Brand Methods

IR PRODUCTS INVESTMENT COMMUNITY

Product Packaging Customers

ANNUAL REPORT

The annual report is part of due diligence for most analysts before deciding to follow a stock

Most credible Most durable

Most cost effective Widest reach First point of contact Vehicle for other

communications

The IR website is the first place analysts go to get information on your company

WEBSITE

Interactive Instant feedback Best source of non-

financial information Chance to showcase

management’s experience and credibility

Management credibility ranks highest in factors considered important when making investment decisions

PRESENTATIONS

Source: Rivel Research 2008

6

Key IR communication materials

7

Presentations are crucial

Source: Ernst & Young LLP 2008 Source: Rivel Research 2010

Which sources of non-financial company information do you consider important?

(Survey of U.S. analysts and fund managers)

79%

76%

69%

68%

65%

65%

65%

65%

64%

61%

Management presentations

Public filings or reports

Sell-side analysis

Competitors

Business press

Investor relations department

Customers

Buy-side analysis

Trade press

Informal network

Analysts and fund managers rate investor presentations as their most used IR website resource

20%

20%

24%

33%

38%

72%

80%

100%

Excel spreadsheets

Charting tools

Mobile access

RSS fees

Calendar synchronization

Email news alerts

Webcasts

Presentations

Identity

Ingredients:

Industry overview

Company overview

Corporate strategies

Core products

Market-based operations

Customers

Competitive advantages /

strengths

Events:

Investment conference Non-deal roadshow Company visit

Events:

SET’s Opportunity Day Quarterly analyst meeting Full-year earning presentation

Performance Event

8

Types of presentation slides

Presentation slides

Ingredients:

Recap of major event (if any)

Operational performance

highlights

Financial performance

highlights

Analysis of the results

Outlook

Ingredients:

Executive summary

Rationale of the transaction

Transaction information

Impact

Timeline

What happened?

Impact

Solution / What’s next?

Events:

Event analyst meeting − New business − New strategic direction − Major investment − M&A or divestment − Capital increase

Deal roadshow Crisis

12

Source: Adapted from www.thebusinessofmining.com

Story & structure

Management Communication

Professional Organization

Lack of convincing storyline

Not structure and illogical

Lack of fact and/or rationale

Sections of document are not clearly linked together

No clear messages

In adequate support data

Just present fact, no “so-what??”

Not attractive & professional visual appeal

Inconsistency in terms & reference

Unclear graphs, misaligned text

Pitfalls of analyst presentation?

CONTENTS








Value of feedback

13

14

Four steps to a best practice presentation

Define your value

story/thesis

Structure

presentation

Gather

information

Develop

Presentation

Develop logical structure

Storyline & Storyboard

Company data

Industry data

Economic data

Slide types

Effectively designed visual aids

1 2 3 4

What sets your company apart?

Core skills and competitive advantages

Business strategy

15


Define your value

story/thesis

Structure

presentation

Gather

information

Develop

Presentation



Business strategy



Company data

Industry data

Economic data

Slide types


1 2 3 4

16

Sample of investment story/thesis?

Player in growth markets

Extending traditional strengths to new markets

New business opportunities

Management competence/credibility

Sustained financial performance

Innovation/Industry/Market leadership

Corporate partnership

17

Where do you get your investment thesis/story?

Formulate the investment thesis

Ascertain what management thinks – Attending board & management meetings

– Discussion with top management

Determine your business – Strategy map

– Business model

– Financial model

– Value drivers

Determine what the analysts and investors think

– Market signals analysis or feedback survey

– Analyst reports

– FAQ

Strategy – How your company plans to grow?

– How you do things differently from the competitors?

Strengths

– What are your qualities that you utilize to achieve target?

– What are your qualities that your competitors do not have?

Market Position

– Where are you positioned in relation to your competitors?

Determine your company value

“Me too!” mistake

“Trying to be all things to all people” mistake

“Not knowing your audience” mistake

“Death by numbers” mistake

“Wish list” mistake

Inadequate Differentiation

Common investment story/thesis mistakes

Dilution

Disconnection

Too much emphasis on earnings

Too much like a mission statement

18

19


Define your value

story/thesis

Structure

presentation

Gather

information

Develop

Presentation



Company data

Industry data

Economic data

Slide types


1 2 3 4



Business strategy

A storyboard lets you organize your ideas and visualize your final product and lets you lay out the logic of your presentation in the most effective sequence

20

Storyboard is the key starting point for structuring presentation

21

The power of ‘post-its’

Source: Presentation Zen, Garr Reynolds

22

A pyramid logic structure creating a well-organized and easy-to-follow presentation

Source: Recommended Approach to Presentation Writing, Jean-Florent Rérolle & The Pyramid Principle: Logic in Writing and Thinking, Barbara Minto

Pyramid Logic Structure

Horizontal Relationships

Objective/ Main Point Title

Sections

Sub-sections

Supporting facts

Presentation

Vertical Relationships

24

Using this outline, a storyboard should be created to begin “writing” the presentation

“Ve

rtic

al R

ela

tio

nsh

ips”

Section Introduction / Exec. Summary

“Horizontal Relationships”

Executive Summary Title

• • • •

•

•

•

•

•

•

•

•

•

•

•

•

Title

• • • •

Title

• • • •

or

Summary Story

Summary Story

Appendices

Highlights

• • •

Sections

Supporting facts

• • • •

Sub-sections

Analysis Detail Analysis Detail

Analysis Detail Market Research Detail


29


Define your value

story/thesis

Structure

presentation

Gather

information

Develop

Presentation



Company data

Industry data

Economic data

Slide types


1 2 3 4



Business strategy

30

Gather information

Financial data Financial statements

Non-financial data

Department statistics

Context Management, department

heads

Company Data

Industry-specific publications

Industry studies

Competitors

Suppliers

Industry Data

Bank of Thailand Financial sector data, interest

rates, exchange rates

Ministry of Finance

Government income,

budget, public investment projects

National Statistical Office

Employment, population, etc.

National Economic & Social Development Board (NESDB)

Retail sales, direct investment, etc.

Economic Data

31


Define your value

story/thesis

Structure

presentation

Gather

information

Develop

Presentation



Company data

Industry data

Economic data

Slide types


1 2 3 4



Business strategy

32

Three basic types of content slides to help develop this “supporting story”

Presentation

Diagrams

Text Exhibits

__________________________________________________ • ______________________

______________________ • ______________________

______________________ __________________________________________________

Graphs: • Summarize numerical data • Draw attention to specific facts • Explain trends in underlying data

Diagrams: • Convey cause / effect, sequential

relationships between observations

• Organize information • Explain conceptual ideas

Text Exhibits: • Convey specific facts or ideas • Eliminate errors in interpretation

of the information presented • Summarize information on

previous or subsequent slides • Organize large amounts of

information


33

Text exhibits are useful for organizing large amounts of information

Text Exhibits

__________________________________________________ • ______________________

______________________ • ______________________

______________________ __________________________________________________

Outline

__________________________________________________ • ______________________ • ______________________

• ________________ • ________________

__________________________________________________

Table Matrix Form


--------------- ----------------------------------------------------------------------

--------------- ------------------------------------------------------------------------------------------------------

-------------------------

--------------------------------------------------------------

--------------- --------------------------------------------------

--------------- -----------------------------------------

Low

Med

High

Low Med High

34

Diagrams are used to demonstrate sequential, cause and-effect and dependency relationships

Diagrams

Gantt Conceptual Map Organizations Flow


35

Graphs help draw attention to underlying trends or relationships in data series

Graphs

50

40

30

20

10

Line Pie Bar Dot

Sliding 100%

Surface/Area Curve

Single

Multiple Stacked Step Waterfall


CONTENTS








Value of feedback

46

CONTENTS








Value of feedback

64

65

PRESENTATION DAY

WEEK 4 WEEK 3 WEEK 2 WEEK 1

WEEK 4

Start thinking about the audience: o Who will you target: analysts, fund managers, retail investors, business media? o How many will you invite; how many do you expect? o Do they cover your stock already or are they new to your company? o Have you been doing IR regularly or will this be the first time? o Do you have their contact info on file already or do you need to get them first?

Begin collecting info & data from finance team and other relevant departments (marketing, research, production…)

Book venue: o Company board room

o Hotel function room (recommended; should be near BTS/MRT)

The analyst presentation timeline

66

WEEK 3

Message development: o Start developing the overall core message and theme of the presentation o What is the key message you want analysts to take away? o Draft storyboard of the presentation: how will it flow, what will be the various sections? o Do you have all necessary info/data from the other departments or do you require further information? o Does the data/numbers support your core message? o Either adjust the message or find further data that support the message

Send invitation

o By fax and by email o Avoid mass emailing as many email systems will treat your email as spam o Send invitation to both the analyst and the head of equity research (his/her boss)


PRESENTATION DAY


67

WEEK 2

CEO/CFO review 1 o Go through the presentation with top executives. Does the core message fit with the corporate strategy? o Are the numbers and calculations correct? o Are they comfortable with the level of disclosure?

CEO/CFO review 2 o Run through the presentation again with top executives to ensure their comments and amendments

have been included

Draft feedback survey, Q&A, and news releases o Prepare a questionnaire designed to get analyst’s opinion of the presentation (e.g. which section was

most useful, how can we improve our disclosure, how does the presentation compare with your competitors…)

o Prepare a list of likely questions and suggested answers for presenters o Prepare news releases for business media


PRESENTATION DAY


68

WEEK 1

Send reminder invitation to analysts and fund managers o By fax and by email, similar to Week 4

Presentation final review and approval by CEO and CFO o Fix last errors, include last minute comment from CEO/CFO; CEO sign off o Ensure presenters are comfortable with Q&A

Prepare ‘Cheat Sheet’ and other supporting documents o Prepare spreadsheets for key operational and financial performance with breakdown numbers and

analysis (vertical & horizontal) o Prepare other supporting data (e.g. projections, investment progress, sources of funding, …)

Produce list of confirmed attendees Print out presentation, news release, and feedback survey


PRESENTATION DAY


69

PRESENTATION DAY

Registration table: o IR and support staff welcome attendees o Collect business cards and contact info o Hand out hard copy of the presentation and feedback survey to all attendees

MC introduces speakers; translates if necessary; presenters deliver the presentation (suggested time: 45 min. to 1.5 hr.) o If translation necessary, be mindful of the time (x2!)

Q&A session concludes presentation; MC reminds attendees to fill out survey; IR staff collects survey

Site visit if appropriate (plant visit, project tour etc…)


PRESENTATION DAY


70

FOLLOW UP

FOLLOW UP

Thank you note to all attendees no later than 48 hours after the event

Mail/email presentation to analysts who had confirmed but did not attend

Upload presentation/webcast with English translation script on IR section of your

corporate website

Send out news release to business media

Monitor coverage and market movements

Review analysts feedback

Present analysts feedback report to CEO/CFO and The Board (if necessary)

Follow up as necessary if feedback shows misunderstanding or is negative


PRESENTATION DAY


CONTENTS








Value of feedback

71

74

Dealing with questions

Prepare a list of possible questions and supporting documents

o See Q&A in the presentation timeline, Week 2 o See ‘Cheat Sheet’ and supporting documents, Week 1

Focus on the ‘tough’ questions

o If you are ready for the tough questions, everything else will seem easy o You are a publicly-listed company, not a private one. All questions (almost) are fair game

“No comment” is not an answer!

o “No comment” = “There is a big problem and I don’t want to talk about it”

To what extent do you

think the new

management of Company

ABC has been able to

deal with these problems?

75

Do you think your expansion plan is too aggressive /

conservative?

Can you finance this huge CAPEX? How?

What is your growth story?

What makes your confident in making a footprint overseas?

What are your strengths or advantages in that market?

Your margin declining… why? How long will this continue?

Have you seen any slowdown in the market?

Is your financing policy too conservative?

Questions that sending signals

Samples of signal questions

CONTENTS








Value of feedback

76

77

Sample of feedback questionnaire

Value of feedback: feedback questionnaire

78

Value of feedback: feedback questionnaire

Suggested question

How would you rank the severity of the problems which

Company ABC faces today?

What do you think of Company ABC’s new strategy of

expanding in foreign markets like India and China?

What do you think Company ABC’s main challenges will be

going forward?

How would you rate the overall standard of Company’s results

presentation this quarter compared to the results

presentations its main competitors?

How could Company ABC improve its quarterly results

presentations going forward?

80

How IRO adds value to the presentation

IRO is a source of feedback from previous presentations

IRO can help the company communicating one single

message

IRO possesses knowledge about the company and needs

of analysts and investors

IRO is a unique position linking the company,

management, and the investment community

IRO is the most capable man in tailoring analyst

presentations

81

PYI Consulting Company Limited

26th Floor, Capital Tower

All Seasons Place

87/1 Wireless Road

Bangkok 10330 Thailand

Pathom Yongvanich, Director & Partner:

[email protected]

+6681-866-1449

Sarit Chokchainirand, Director & Partner

[email protected]

+66818552564

Office Tel. +662-685-3838

www.PYI.co.th

Contact Us

good practices for analyst presentation · good practices for analyst presentation ... a pyramid...

Documents