Removal of quarterly reporting?

[karlmarx]

It looks like SGX is serious on making changes to quarterly reporting, as "concern about compliance costs has been repeatedly raised among market professionals and listed companies..." 

https://www.businesstimes.com.sg/compani...too-narrow

Some questions/comments:

1. With regards to a 'risk-based' approach of deciding who is subject to quarterly reporting, and who isn't, how is risk defined? And who decides what is risky? 

2. If companies are threatening to delist, or not IPO, because of "high compliance costs," and if it is in the interest of SGX to maintain a healthy public capital market, maybe SGX should consider reducing some of the listing fees that it receives. And consider other sources of revenue. It is a very bad idea to remove quarterly reporting, regardless of their market capitalisation. 

SGX should consult their peers at BCA on whether it is a good idea to remove audits because of the costs to contractors and building owners. 

3. The only time I will accept half-yearly reporting -- if it isn't already -- will be when I trust the company's management. Companies that wish to do away with quarterly reporting should put it on their AGM resolution -- prior to SGX's approval-in-principle -- and be allowed only if a majority of the minority shareholders vote for it. Companies that want the benefit of lower compliance cost should have to earn it, and not expect it to be given.

[dreamybear]

Personally, I do follow the quarterly reports of my larger shareholdings, I do not want any unpleasant surprises because it is my hard-earned money.

Now it makes me wonder how those Top 10 or 20 shareholders think - for owners of a few millions of a particular stock, is quarterly reporting really enough ?  If it were me, I wld want monthly reporting !    

Maybe that's why the top shareholders are probably rich people(who can afford to diversify significant portions of their wealth) instead of an average dude putting in most of his / her net worth into a particular stock. But that wld also mean it's unlikely for the average dude to become rich, based on a small shareholding.

But well, without quarterly reporting, I may be inclined towards blue chips which I perceive to be more "stable". 

[corydorus]

Quarterly reporting very important for Reits. Keep them on their toes. I think this stress the management rather than the cost issue.

[pencilin]

It's a turn off for shareholders.
I think it will worsen the attractiveness of SGX. Bad move

[weijian]

3. The only time I will accept half-yearly reporting -- if it isn't already -- will be when I trust the company's management. Companies that wish to do away with quarterly reporting should put it on their AGM resolution -- prior to SGX's approval-in-principle -- and be allowed only if a majority of the minority shareholders vote for it. Companies that want the benefit of lower compliance cost should have to earn it, and not expect it to be given.

hi karlmarx,
We could probably invert this and make this a litmus test in our investment checklist - Whether i am comfortable with do away with quarterly reporting, and stick to half yearly reporting. If the answer is YES, it is probably a buy i suppose?

This quarterly reporting review is under SGX RegCo Tan Boon Gin. So far on the big issues, my personal opinion is that him and his team has not disappointed to-date.

[Big Toe]

The bigger problem here is not about quarterly reporting. It is about the serious lack of global/regional companies willing to list here.
When is the last time a reasonably established Regional/Global company listed here? If you take away all the GLCs, what are you left with?

Singapore might have done reasonably well in some areas, ie Reits, but in terms of quality listings, to put it bluntly, it is a joke. Razer, a home grown brand was not even bothered to even think of listing here. It matters because without quality listings, the market would be deemed 2nd/3rd tier. Now Singapore always wanted to be world class, no? World class stock market we are not.

[karlmarx]

hi karlmarx,
We could probably invert this and make this a litmus test in our investment checklist - Whether i am comfortable with do away with quarterly reporting, and stick to half yearly reporting. If the answer is YES, it is probably a buy i suppose?

My preference, like most investors, is for quarterly reporting; even in the case that I trust the company's management. It is the same with knowing that my money is safe with DBS (or whichever bank you trust); I still want to be able to check on my balance, whenever it so pleases me. 

If DBS says, "Ok, you know what, all these online banking platform is just too costly to maintain. We're going to go back to sending you monthly statements instead. Or you can queue at the ATM to get your passbook updated." It will be terrible but I will just have to accept it. Because, what else then?

SGX's initiative is not ideal, but acceptable.

===

Generally, more frequent provision of data will allow investors better understanding of the business. Business owners/operators probably don't want to have to wait a quarter before they receive data on their business' performance. The reason is to allow them to react accordingly to any possible operational issues and/or market changes. 

For a business owner/operator to wait 3 (or even 6) months before they receive data on their business' performance is probably unheard of. Expect perhaps in cases where nobody could care less about the fate of the business.

This initiative by SGX to implement a half-yearly reporting creates opportunities for unsavoury businesses to perform activities that are damaging to public shareholders. Implicit in the initiative is also the increasingly subordinate position of public shareholders. "How does quarterly reporting benefit you coatailing shareholders, who only clamour for ever-increasing dividends?" is what they seem to be saying.

Instead of removing quarterly-report, perhaps companies can provide an abridged version of the quarterly, such as providing operational and financial data, such as sales, profit, volume, etc. HKEX companies are doing this. It is not ideal for public shareholders, but it is better than waiting 6 months before hearing anything about the business.

===

I don't expect my portfolio to have any changes because of this initiative; I will just accept it if they report half-yearly. 

But if this is applied to new listings, or companies with a short listing history -- which in other words refers to those companies without a proven history of its business and corporate governance -- there is a higher probability of public shareholders being abused.

[karlmarx]

The bigger problem here is not about quarterly reporting. It is about the serious lack of global/regional companies willing to list here.
When is the last time a reasonably established Regional/Global company listed here? If you take away all the GLCs, what are you left with?

Singapore might have done reasonably well in some areas, ie Reits, but in terms of quality listings, to put it bluntly, it is a joke. Razer, a home grown brand was not even bothered to even think of listing here. It matters because without quality listings, the market would be deemed 2nd/3rd tier. Now Singapore always wanted to be world class, no? World class stock market we are not.

Singapore is a mature economy. So new (and successful) companies are few. 

And financing is still cheap. If a company has to sell shares to finance expansion, it is probably quite deep in debt, which means quality of company is suspect. If it is a start-up with promising early results, plenty of private capital will be fighting to finance its growth.

The better companies may IPO for publicity. But market valuation multiples are not high. So unless they are willing to promise a high dividend payout ratio, it is not likely that they will accept the valuation given for a 30% payout ratio. If I can buy REITs yielding 5-7%, why should I buy something that offers only 2-3%?

It is hard to tell whether this listing dry-spell will be a long-term situation. But I am more optimistic than otherwise.

===

One of the ingredient which contributed to the success of REITs can also be applied to every other listed company; offer tax incentives to companies willing to maintain a certain (higher) dividend payout ratio. 

Share price (and valuation multiples) will move higher, and more companies may consider listing.


Too many companies sitting on unnecessary cash/properties, with low payout ratio.

[soros]

I was told some companies are sitting on unnecessary cash to ensure the company has funds for the future .i.e able to pay the directors fees

[specuvestor]

In theory quarterly reporting is good. But you mix in the human element and it becomes complicated. With quarterly reporting management time becomes quarterly focused and seasonality is much more pronounced.

If I have a choice I rather have half yearly reporting but strengthen on the reporting and audit, eg audit is appointed by SGX rather than board, scaled down version of annual reporting but with similar robustness.