With all the SGX-listed companies reporting their full-year results (for the year ending 31 December 2024), the annual general meeting (AGM) season is here once again.
Once a year, investors will get the chance to meet management in person and query them about the businesses they own.
Such a venue is a useful place to size management up and find out more about the company’s plans for the future and how they intend to mitigate risks.
Here are five key questions you should ask management at the upcoming AGM.
Effects of tariffs
The first question that will be on most investors’ minds will be – how does each company or REIT manage the effects from Trump’s raft of tariffs.
Although the US President has announced a 90-day pause on reciprocal tariffs, the baseline tariff rate of 10% still applies and has kicked into effect.
Companies and countries are now scrambling to make sense of these new taxes and their impact on everything from supply chains to selling prices.
Management should have had sufficient time to digest the news since Liberation Day was back on 2 April, and the AGM is an appropriate place to query management on how these tariffs will impact the business.
If the company garners the bulk of its revenue by selling to the US, this point should be addressed and management should suggest ways of mitigating these tariffs.
Even if there is no direct impact from the tariffs, management should be open and knowledgeable enough to discuss possible second-order or even third-order effects.
While much is still not known at this point, companies should step up and make an educated guess about what may happen, and take action accordingly.
Tariffs will most certainly lead to an overall increase in costs as this tax has to be borne by someone.
Companies should also discuss the effects on supply chains and whether they are formulating plans to rejig these chains or look for alternative vendors to source raw materials.
These snippets will go a long way in helping investors understand how companies navigate this tricky environment to mitigate the impact of the tariffs.
Debt management
Next, shareholders should query management on how the business manages its debt load.
Of course, this point is only applicable to companies with debt on their balance sheets.
With interest rates still hovering at elevated levels and a potential “higher-for-longer” scenario playing out, companies should detail their plans for debt management to assure shareholders that finance costs will not balloon.
Specifically, shareholders can ask about the company’s cost of debt and how this is being managed as loans come due and get rolled over.
Management should inform shareholders about their plans to reduce debt and communicate a goal to reduce debt by a certain percentage or amount by a specific date.
If more debt needs to be taken up, there should be adequate justification – examples may include starting a new production line, building a new factory (capex), or for a potential acquisition.
Dividend policy
A company’s dividend policy is another useful area to query.
While larger, blue-chip companies may have stated policies for dividends based on a payout ratio, smaller companies may not have such guidelines.
Shareholders can ask for dividend guidance with a view on how the business will perform in the next year or so, with information on any headwinds or challenges baked in.
Ideally, management should at least communicate a dividend policy based on earnings and lean on their track record (if any) of paying regular dividends.
As the future remains uncertain, questions should surround dividend policy rather than asking what the specific dividend payment per share will be.
Growth plans and strategies
Another popular question for management involves growth plans and strategies.
Some companies such as Singapore Technologies Engineering (SGX: S63) [STE] or CapitaLand Investment Limited (SGX: 9CI) [CLI] have announced Investor Day events.
Such events allow management to elucidate a long-term strategic plan for business growth along with objectives and targets.
STE came up with ambitious five-year targets for both dividend and profit growth by 2029 while CLI intends to increase its funds under management to S$200 billion by 2028.
Shareholders can ask for a progress report on these initiatives and management should provide an update on milestones for these targets.
Other plans may include the construction of a new facility or factory to launch a new product or service, expansion into new territories or regions, and the hiring of new staff to take over key roles within the organisation.
Acquisitions
Finally, we should not leave out the topic of acquisitions.
While some companies may rely solely on organic growth, there are many, including those in the REIT sector, that make use of acquisitions to grow their business.
A review of any acquisitions made in the preceding year should be performed, and shareholders should query the rationale and benefits of the acquisition and how the purchase has turned out.
Another key question that should be asked and is usually not mentioned in the annual report is whether the acquisition is a good fit and if it is causing any problems.
Next, shareholders should also ask about potential acquisitions and whether the company has a war chest for such purchases.
Finally, management should lay out the criteria for acquisitions and whether they are bolt-on (i.e. small acquisitions to complement the business) or larger ones (transformative acquisition).
Explore Singapore’s top “evergreen” stocks with our FREE report. It spotlights 7 Singapore blue-chip stocks with solid dividends and growth potential. Click here to download it now to create a flow of dividend income, regardless of market conditions.
Follow us on Facebook and Telegram for the latest investing news and analyses!
Disclosure: Royston Yang does not own shares in any of the companies mentioned.
