[Beginner's Guide to Stock Investing] Why Beginner Investors Should Read Business Reports

[Asia Economy Reporter Kwon Jaehee] For investors who pay close attention to disclosures, you may have recently noticed that companies' "business reports" stand out more than usual. Unlike general disclosures, business reports are longer and tend to be released in large volumes at specific times, which might have made you hesitant to read them. However, I recommend that beginner investors read business reports at least once. So, when are business reports released, and what do they contain?

When are business reports released?

Listed companies are required to prepare reports on a quarterly, semi-annual, and annual basis. This is not optional but mandatory. Therefore, four reports are released each year. The reference dates are March 31 for Q1, June 30 for Q2, September 30 for Q3, and December 31 for Q4.

The Q1 report must be submitted within 45 days from March 31, by May 15 at the latest. The Q2 report is combined with Q1 to be submitted as a semi-annual report, which must be submitted by August 15. The Q3 report is due by November 15, and the Q4 report, which combines all four quarters, is submitted as the annual business report.

The deadline for submitting the business report is March 31 of the following year.

Why must investors read business reports?

Business reports contain information about a company's business status, financial condition, and management performance over periods of 3 months, 6 months, and 1 year. The obligation for listed companies to issue business reports is intended to ensure fair pricing in the securities market and to help investors make rational decisions.

What information is included in business reports?

Regular reports include various contents, with the first section being an overview of the company. You can check the company's history, changes in the number of shares, capital increase status, dividends, and more.

The second section covers the business details. This is one of the most important parts of the regular report. When investors invest in a company, it is crucial to understand what the company produces, what services it provides, and the risks related to its business environment. This section provides exactly that information.

The third section is the "company's report card," where you can review financial matters. Through financial statements, you can check the company's financial status, performance, and cash flow, and the notes provide various details about the financial statements.

The fourth section includes management's business diagnosis, and the fifth covers the auditor's opinion. The sixth section provides information about the board of directors, and the seventh about shareholders. You can find out who the largest shareholders are, who holds more than 5%, and the status of minority shareholders.

The eighth section covers the wages of executives and employees, and the ninth provides the status of affiliates and subsidiaries in which the company holds shares. Important subsidiaries can significantly impact a company's performance and stock price, so it is essential to check them.

For example, if you check Kakao's business report, you can find the shareholding ratios and profits of key subsidiaries such as Kakao Mobility and Kakao Page in this section.

Investors are always thirsty for information. Because of this, they sometimes get swayed by rumors. However, to survive long in the investment world, developing the ability to distinguish the good from the bad is a skill. This is why reading business reports is essential. The more you study and learn about the companies you invest in through business reports, the more your investment will shift from luck to skill. I support the wise investments of all beginner investors.

Editor's NoteEditor's Note [Beginner's Guide] is a smart investment guide for "Joorini" (stock + child).
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