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IndoAgri CEO believes in engaging shareholders
AMID reduced liquidity, palm oil producer Indofood Agri Resources (IndoAgri) makes it a point to actively engage shareholders, analysts and potential investors, taking various avenues to do so. The market has changed since the firm listed on the Singapore Exchange over 10 years ago, says Mark Wakeford, CEO of IndoAgri.
"At that time, there was a lot of liquidity in the market," he says. "There was actually quite good coverage from analysts, and therefore investors. That has changed quite substantially now. Mid-cap (liquidity) - large-cap as well, but certainly mid-cap liquidity - has been hit quite hard, and subsequent to that, you've also seen some of the banks scale down their investments in equity research and equity sales."
Today, the sector gets less attention compared to five years ago, he reckons. IndoAgri still has "reasonably good analyst coverage", he adds, from about eight to 10 analysts across Indonesia, Malaysia, and Singapore. As such, it tries to have more dialogue with existing analysts, and direct dialogue with shareholders. Its shareholder base has also changed, shifting away from funds which stay invested for a longer term of two to three years, which makes it more challenging to build a long-term connection with shareholders.
"We've seen a lot more hedge-fund and short-term activity. We've also got a large retail (base), about 5,000 to 6,000 retail investors at the last review," he continues. "(It's) a challenge to connect with retail investors in Singapore as well. We see them as a good, important part of our shareholder base, but it's not easy to connect with them, even at the annual general meetings. The attendance is reasonable, but it's a very, very small percentage." With this in mind, the company takes a few different approaches in trying to reach out to shareholders and potential investors, mostly around the quarterly results.
"The first. . . is through the banks. Most of the funds that want to speak to us know they can come and talk to us. We go to the investor conferences. Those have reduced as well," he says.
"Up until a couple of years ago, that was a very good way to connect with a large (group). In two days, you could meet 60 or 70 shareholders or potential investors," adds Mr Wakeford, who won the Best Chief Executive Officer (CEO) Award for companies with S$300 million to S$1 billion in market capitalisation at the Singapore Corporate Awards.
IndoAgri also places heavy emphasis on sustainability, which is increasingly important to potential investors. Among other things, it is working towards the Roundtable on Sustainable Palm Oil (RSPO) certification, a recognised and independently audited sustainability standard for the palm oil industry. The company is aiming to be fully certified by 2019.
IndoAgri's business spans the entire supply chain from oil palm seed breeding, to cultivation, refining and marketing of cooking oil, margarine, shortening and other palm oil derivative products. In addition, the group cultivates other crops such as rubber and sugar cane. While the majority of its plantations are in Indonesia, it has also invested in businesses in Brazil and the Philippines.
With a business of this scale, as CEO, the best way to manage his staff is to pick the right talent, give them clear targets but ultimately trust them to deliver, Mr Wakeford believes. Having a robust planning process is also key, which is why the management team spends a lot of time carving out the budgets for the next year as well as crafting a three-year plan. (These get revised along the way as well, if needed.)
It also has a succession management process in place within its management structure, looking not just at immediate successors but also at the next tier. The group then works to provide its staff with the opportunities and necessary skills to progress within the company.
With additional reporting by Tan Jia Hui