A Look at 3 Companies that Conducted Share Buyback Recently

Share Buybacks occur when a company buys back its shares from the open market with its own internal financial resources.

Many investors might be curious about why companies conduct Share Buyback? This could boil down to a few reasons such as:

• Current share price level does not reflect the company’s true intrinsic value

• Reduce number of outstanding shares on the market, improves relevant financial ratios

• Reduces the company’s overall cost of capital

• Helps individual company to consolidate ownership

With that, we will be looking into 3 companies that conducted Share Buybacks recently:

• The Hour Glass Limited (SGX: AGS)

• Tuan Sing Holdings Limited (SGX: T24)

• Global Investments Limited (SGX: B73)

1) 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.

In the month of July, The Hour Glass’ management has been actively purchasing its share back from the open market. The first purchase was on 5 July, where the management bought back 100,000 shares at an average price of S$1.497.

Till date, The Hour Glass has bought back a total of 5.712 million shares, with an estimated total transaction value of S$8.26 million.

2) Tuan Sing Holdings Limited (SGX: T24)

Tuan Sing Holdings Limited (“Tuan Sing”) is a diversified regional investment holding company with interests mainly in property development, property investment and hotel ownership. Over the years, the Group has developed a portfolio of strategically located real estate assets in Singapore and across the region.

In the month of July, Tuan Sing’s management has conducted 3 Buyback transactions, starting on 1 July, where it bought back 22,000 shares at a price range of between S$0.505 and S$0.51.

Till date, Tuan Sing has bought back a total of 54,000 shares, with an estimated total transaction value of S$29,000.

3) Global Investments Limited (SGX: B73)

Global Investments Limited (“Global Investments”) is a Singapore-based mutual fund company. The Company invests in a range of sectors, including aerospace and defense, consumer products, media and publishing, oil and gas, utilities, construction and homebuilding, logistics, real estate, finance related and telecommunications.

In the month of July, Global Investments’ management has been actively purchasing its share back from the open market. The first purchase was on 1 July, where the management bought back 58,000 shares at a price of S$0.151.

Till date, Global Investments has bought back a total of 2.997 million shares, with an estimated total transaction value of S$463,000.

Conclusion

To sum up, there are no definite answers as to whether share buyback is beneficial to all stakeholders in the respective company.

On one hand, Share Buybacks helps to reduce the number of shares outstanding in the stock market. This in turns 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 might prefer companies use the excess cash resources to pay out a higher dividend or grow the company at a faster clip.

In other words, investors need to ascertain if the past trend of Share Buybacks yield well in terms of the management team’s capital allocation.

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