TL;DR : Look at what management is doing/what kind of signals they are sending to investors.
Explanation:
Not an expert on the shares of Hong Kong Land but i'll offer some help in understanding the rationale behind a share repurchase program/buyback.
One good reason could be that the management thinks its shares are undervalued, and now could be a good time to take back those shares it initially issue so it could save on paying dividends to the holders and put those savings back into maintaining the company's asset or growing the company.
One bad effect of a share buyback is that it will boost the Earnings per share(EPS), and new investors might buy into the company thinking its growing but in actual fact, revenue/net income is on the decline and only the actual numbers of shares outstanding has declined.
Not saying that's what HK land is trying to do, but just know that doing this will have an impact on the image of its future earnings. An ethical management team should tell the investors the reason for the gains in EPS (be it through share buyback or genuine earnings growth) in the notes to the financial statements if you're reading into it.
Just to illustrate with an example:
Company A makes $1,000,000 in Net Income on Year 1 with 200,000 shares outstanding:
Earnings per share = (Net Income - Any Preferred dividends)/Weighted Average of shares
Earnings per share = 1,000,000/200,000 = $5
Next year, it makes only $900,000 but within the year they did a share repurchase program, taking 100,000 shares back leaving 100,000 shares outstanding:
EPS = 900,000/100,00
EPS = $9
A new investor would think that the company is growing but hey hey, you as a smarter investor knew why this happened ;)
Hope this explanation helps!
Disclaimer: Not investment advice, just sharing some knowledge, do your own due diligence!
TL;DR : Look at what management is doing/what kind of signals they are sending to investors.
Explanation:
Not an expert on the shares of Hong Kong Land but i'll offer some help in understanding the rationale behind a share repurchase program/buyback.
One good reason could be that the management thinks its shares are undervalued, and now could be a good time to take back those shares it initially issue so it could save on paying dividends to the holders and put those savings back into maintaining the company's asset or growing the company.
One bad effect of a share buyback is that it will boost the Earnings per share(EPS), and new investors might buy into the company thinking its growing but in actual fact, revenue/net income is on the decline and only the actual numbers of shares outstanding has declined.
Not saying that's what HK land is trying to do, but just know that doing this will have an impact on the image of its future earnings. An ethical management team should tell the investors the reason for the gains in EPS (be it through share buyback or genuine earnings growth) in the notes to the financial statements if you're reading into it.
Just to illustrate with an example:
Company A makes $1,000,000 in Net Income on Year 1 with 200,000 shares outstanding:
Earnings per share = (Net Income - Any Preferred dividends)/Weighted Average of shares
Earnings per share = 1,000,000/200,000 = $5
Next year, it makes only $900,000 but within the year they did a share repurchase program, taking 100,000 shares back leaving 100,000 shares outstanding:
EPS = 900,000/100,00
EPS = $9
A new investor would think that the company is growing but hey hey, you as a smarter investor knew why this happened ;)
Hope this explanation helps!
Disclaimer: Not investment advice, just sharing some knowledge, do your own due diligence!