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Published on: 10/11/2006
Last Visited: 2/24/2008
An interview with Nancy Chen, investor relations manager at Hong Kong-based supply chain management group Li & Fung
Given that Li & Fung was founded in 1906, you might think that the last eight years were fairly inconsequential in terms of its overall history.You'd be wrong.Since the mid-1990s the Hong Kong-based company has been intent on reinventing itself as a global supply chain management group from its roots as a regional trading company.Several acquisitions and some canny management decisions later and the group has a presence in most major markets and an investor following to match.
Nancy Chen, Li & Fung's investor relations manager, was lucky enough to join the group near the beginning of this intense expansion period and has worked alongside the management team to improve their disclosure and IR programme along the way.Back in 1997, Chen was a sell-side analyst covering Li & Fung for CLSA.She knew the group and its management - and its expansion plans - so when the offer came to join the company as an assistant to the group managing director it was too good an opportunity to miss.
'I was originally taken on to look at special projects on behalf of the managing director,' she says, pointing out that, at the time, the company was still a mid-cap stock, largely focused on regional trading.Needless to say, investor relations was in its infancy, with the management team seeing investors when they could according to requests for meetings. 'At that time the number of requests was way down on where they are now,' says Chen.
Modest achievementsToday, Li & Fung has a relatively open and transparent disclosure policy by Asian standards and has worked hard to look after investors' interests.Chen is relatively modest about the company's achievements on the IR front but analysts and investors are more upbeat and have given the company the nod more than once for its proactive IR policies.Indeed, the company won one award and was highly commended in another at last year's Asian investor relations awards, which were based on a survey of the financial community.Crucially, the category it won was Best Investor Relations by an Asian Company in International Markets - it is an area that Chen and her colleagues have worked hard to cultivate.The commendation was for Chen in the Best Investor Relations Officer category.
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Most weeks Chen and colleagues meet with three to four investors at their headquarters, the majority of those visiting from overseas.They also hold regular briefings for the locally-based institutions, backed up by conference calls for those who cannot attend.Chen is supported in the task by three of the executive directors and the expansion of the company's IR function has been dependent upon them being able and willing to devote more time to meet with the financial community.
Regular international roadshows are also part of the programme and Chen works closely with the company's brokers to ensure that they are targeting the right people to attend their meetings. 'Information on investors is quite readily available from various service providers and one of my jobs is to look at the holes in our investor base relative to other companies.I then ask the brokers to invite those institutions along to our meetings and, if they don't want to come, check the reason why so that we can take that into account in the future.'
So what are the main challenges for Chen in conducting Li & Fung's IR programme?She notes that there is always the issue of providing her audiences with the big picture. 'Every company is made up from lots of small parts so the challenge is putting together the bigger story for everyone to understand.
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Li & Fung has long had a commitment to good corporate governance but Chen has been trying to make sure that the company is up to date with current international best practice.The group may not have to comply with Sarbanes-Oxley - it is not listed in the US - but the high number of US-based shareholders means that it has to be aware of the issues and able to react to investor concerns accordingly.Things cannot be going too badly since the company picked up an award for its disclosure and corporate governance practices in 2002.
As far as Chen is concerned the key to Li & Fung's IR is being open and honest at all times.Its three year plan helps in that task: the company has revealed a three year strategic plan to investors and regularly updates them on performance relative to its publicly stated goals. 'It makes sure that we deliver on our promises or we are held to account,' says Chen. 'I'm quite proud that most of our investors know our three-year plan and then judge us according to how well we perform against it.It keeps us sharp.'
© Nancy Chen 2003
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