Warren Buffett is a huge advocate of businesses buying back their shares. He believes that share buybacks can reveal a thing or two about the company’s management.
He once opined:
“What you’d like to do as an investor is hook them up to a machine and run a polygraph to see whether it’s true. Short of a polygraph the best sign of a shareholder-oriented management — assuming its stock is undervalued — is repurchases. A polygraph proxy, that’s what it is.”
On that note, let’s check out three companies picked at random that have repurchased their shares thus far during the week, as of market open today.
CapitaLand Limited (SGX: C31)
CapitaLand is one of Asia’s largest real estate firms with a global portfolio of assets such as integrated developments, shopping malls, and offices.
On 28, 30 and 31 May 2018, the property outfit bought back a total of 5,033,000 shares at a price range of between S$3.51 and S$3.55 per share. The total cost came up to around S$17.8 million.
CapitaLand shares are now going at S$3.49 apiece. This translates to a price-to-book (PB) ratio of 0.8 and a dividend yield of 3.4%.
Straco Corporation Ltd (SGX: S85)
Straco owns and operates tourism attractions in China and Singapore. In China, the company has the Shanghai Ocean Aquarium, Underwater World Xiamen, and Lintong Lixing Cable Car attractions under its umbrella. Over in Singapore, Straco Corporation has a majority stake in the iconic observation wheel, Singapore Flyer.
On 30 and 31 May, the company bought back a total of 725,000 shares at a price range of between S$0.76 and S$0.78 per share. It spent around S$558,000 in all.
Shares in Straco ended Thursday at S$0.78 per share. The firm was selling at 16 times its trailing earnings and had a dividend yield of 3.2%.
Yangzijiang Shipbuilding Holdings Ltd (SGX: BS6)
Yangzijiang is the largest China-based company in the Singapore stock market. It is also a leading shipbuilder in China in terms of manufacturing capability and capacity.
On 30 May, the shipbuilder repurchased 5,000,000 shares ranging from S$0.90 to S$0.915 apiece, translating to a total cost of around S$4.5 million.
In an announcement on the same day, Yangzijiang said that the “share buyback was exercised amid the weak performance of the Yangzijiang’s shares recently”. It added that the shipbuilding market sentiment continues to be positive and that the company is confident in building up its order book at a healthy pace. As at 31 March 2018, the shipbuilder had an order book of US$4.5 billion, giving it a stable revenue stream for the next 2.5 years.
Shares in the company are changing hands at S$1.02 apiece now. This translates to a trailing price-to-earnings ratio of around 7 and a dividend yield of 4.4%.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Straco Corporation Ltd. Motley Fool Singapore contributor Sudhan P owns shares in Straco Corporation Ltd.