3 Companies That Have Bought Back Their Shares Aggressively

Warren Buffett’s partner, Charlie Munger, likens companies which buy back massive amounts of their own shares as “cannibals”.

Companies that buy back their shares aggressively create more shareholder value, as their profits are allocated to a fewer number of shares, causing a rise in the earnings per share. Some firms also repurchase shares as they view them as being undervalued.

In Singapore, there are some cannibals in their own right. Usually, the total number of shares that can be bought back here is capped at 10% of the total number of issued shares, without taking into account treasury shares.

According to a recent report by Singapore Exchange (SGX: S68), the three companies below have repurchased more than 1.5% of their issued shares (excluding treasury shares), from the date of their share buyback resolution until the end of November 2017.

1. S i2i Ltd (SGX: BAI) is the table-topper. The firm has a focus on telecom value-added services, high-end consumer mobility products, and information technology-related professional services. Since 1 August 2017, it had repurchased a total of 1,178,530 shares, which represents 8.6% of its issued shares. For the 2017 third quarter, S i2i posted a 75.3% year-on-year decline in net profit to S$114,000.

2. Next on the list is Silverlake Axis Ltd (SGX: 5CP), a technology firm that mostly provides back-end solutions to the banking, insurance and payment industries. The company bought back 131,905,200 shares since 26 October 2017, representing close to 5% of its outstanding shares. For the 2017 first quarter, Silverlake saw its net profit slump 81% year-on-year to RM31.7 million.

3. Last but not the least, Starburst Holdings Ltd (SGX: 40D) repurchased 4,799,200 shares since 27 April this year, translating to 1.93% of its issued shares. The firm, which specialises in the design and engineering of firearms-training facilities, clocked in a net profit of S$676,000 for its 2017 third quarter. This compares to a net loss of S$5.7 million during the corresponding quarter last year.

In all, for the month of November 2017, 22 listed companies repurchased around 27.7 million shares, worth a total of S$39.4 million. The total share buyback value for last month was up 74% as compared to S$22.6 million in October 2017, but down 1.5% year-on-year.

For the first 11 months of 2017, the total share buyback consideration was S$383 million, down 53.2% as compared to the same period a year ago.

For (free!) stock analyses and investing tips, sign up here for your FREE subscription to The Motley Fool's investing newsletter, Take Stock Singapore. It will teach you how you can grow your wealth in the years ahead.

Like us on Facebook to follow our latest hot articles.

The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.