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City Developments Limited Embarks On Its Maiden Share Buyback Exercise

Warren Buffett is a massive advocate of businesses buying back their shares if the conditions are right. He believes that share buybacks can reveal a thing or two about the company’s management.

He once said:

“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.”

With that, let’s check out three blue-chip companies picked at random that have repurchased their shares thus far during the week, as of market open today.

DBS Group Holdings Ltd (SGX: D05)

DBS is a leading financial services group in the region, with a growing presence in Greater China, Southeast Asia and South Asia.

On 13, 15 and 16 August 2018, the bank bought back a total of 2,050,000 shares at a price range of between S$25.06 and S$25.42 per share. The total cost came up to around S$51.78 million.

DBS shares closed at S$25.10 each on Thursday. The bank is selling at a price-to-book (PB) ratio of 1.4 and has a dividend yield of 4.8%, excluding any special dividend.

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 16 August, CapitaLand repurchased 1,049,600 shares at a price range of between S$3.27 and S$3.31 per share. The total cost was around S$3.44 million.

On Thursday, shares in CapitaLand closed at S$3.32 apiece. This translates to a PB ratio of 0.7 and a dividend yield of 3.6%.

City Developments Limited (SGX: C09)

City Developments Limited, or CDL for short, is a Singapore-based property and hotel conglomerate.

On 16 August, CDL started its inaugural share buyback exercise by clawing back 300,000 shares from the market. The exercise was carried out at a stock price range of between S$9.44 and S$9.54 apiece, and an average price of S$9.485. The average price is a 14.8% discount to the net asset value per share of S$11.13, as of 30 June 2018. CDL spent around S$2.85 million in all for the exercise.

In a statement regarding the maiden share buyback exercise, Sherman Kwek, group chief executive of CDL, commented:

“There is deep value in our shares and we have confidence in CDL’s strong fundamentals and future growth potential. We have repositioned our business for the next lap, with a focus on growth, enhancement and transformation. Our robust balance sheet enables us to initiate our share buyback exercise to enhance returns for shareholders. We will continue to seek investments for CDL, capitalising on both internal and external opportunities.”

CDL shares closed at S$9.54 each on Thursday. The property outfit is selling at a PB ratio of 0.9 and has a dividend yield of 0.8%, excluding any special dividend.

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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 DBS Group Holdings Ltd. Motley Fool Singapore contributor Sudhan P does not own shares in any companies mentioned.