3 Companies with Recent Share Buyback Activities

Share buybacks occur when a company buys back its shares from the open market with its own internal financial resources. The common reasons behind share buybacks are as per shown:

• Current share price level might not reflect the company’s true intrinsic value
• Reduction of the number of outstanding shares on the market to improve relevant financial ratios
• Improves the company’s overall cost of capital
• Helps the company to consolidate ownership

With that, we will be looking into 3 companies that conducted share buybacks recently:

• OUE Limited (SGX: LJ3)
• The Hour Glass Limited (SGX: AGS)
• GHY Culture & Media Holdings Limited (SGX: XJB)

1) OUE Limited (SGX: LJ3)

OUE Limited (“OUE”) is a leading pan-Asian, full service real estate development, investment and management company with assets across the commercial, hospitality, retail, residential and healthcare sectors. As of 31 December 2021, OUE’s real estate portfolio was valued at S$9.5 billion.

Source: ShareInvestor WebPro

In the month of March, OUE actively bought back its share from the open market. The first purchase occurred on 1st March, which the company bought back 92,000 shares at an average price of S$1.29.

Till date, OUE has bought back a total of 574,000 shares, with an estimated total transaction value of S$730,000.

2) The Hour Glass Limited (SGX: AGS)

The Hour Glass Limited (“The Hour Glass”) is one of Asia’s luxury watch retail groups and has an established presence with over 40 boutiques in 12 key cities in the Asia Pacific region. The Hour Glass is the official retailer for a collection of luxury watches from more than 50 of the world’s finest watch brands such as Audemars Piguet, Cartier, Hublot, IWC, Patek Philippe, Rolex, Sinn, TAG Heuer.

Source: ShareInvestor WebPro

In the month of March, The Hour Glass commenced its first share buyback on 7th March, with a total acquisition of 372,000 shares at an average price S$1.99.

Till date, The Hour Glass bought back a total of 1.18 million shares, with an estimated total transaction value of S$2.38 million.

3) GHY Culture & Media Holdings Limited (SGX: XJB)

G.H.Y Culture & Media Holding Co., Limited (“GHY Culture”) is an entertainment business that focuses on the production and promotion of dramas, films and concerts in the Asia-Pacific region. GHY Culture has produced several dramas and films in the PRC, Singapore and Malaysia that have been broadcasted and/or distributed on major TV networks and leading video streaming platforms in the PRC.

Source: ShareInvestor WebPro

With GHY Culture’s share price on a downward trend, the company has stepped up its share buyback activities in March. The first buyback occurred on 2nd March, when the company bought back 160,000 shares at an average price of S$0.39.

Till date, GHY Culture bought back a total of 1.10 million shares, with an estimated total transaction value of S$462,000.

Conclusion

The truth is that there is no right or wrong as to whether share buyback is beneficial to all stakeholders in the respective company.

On the positive side, share buybacks help to reduce the number of shares outstanding in the stock market. In turn, this will improve the company's various key financial ratio such as:

• Earnings Per Share (“EPS”)
• Return on Equity (“ROE”)
• Return on Asset (“ROA”)

On the other hand, rather than conducting share buybacks, some investors will prefer companies to return excess cash on hand through higher dividends or capital reduction.

As a rule of thumb, investors can ascertain if the past trend of share buybacks have yielded well in terms of the management team’s capital allocation.

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