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What Investors Should Know About Share Buybacks by Singapore-Listed Companies in October 2018

Companies which buyback their shares could signal to the market that their shares are undervalued. Last month, 29 companies repurchased 30.8 million shares or units for a total amount of S$59.9 million, according to a report released by the Singapore Exchange Limited (SGX: S68) recently.

The October buyback was 36% down from September’s buyback of S$94 million. In October, some companies were on blackout periods, which means that they cannot conduct share repurchases ahead of their earnings release.

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The top six companies with the largest share buyback amount in October 2018 were DBS Group Holdings Ltd (SGX: D05), Keppel REIT (SGX: K71U), City Developments Limited (SGX: C09), SATS Ltd (SGX: S58), Singapore Press Holdings Limited (SGX: T39), and Singapore Exchange. The six companies spent a total of S$47.7 million for the share repurchases.

Singapore Exchange bought back 462,100 shares in October for a total amount of S$3.19 million. SGX shares hit a 52-week low of S$6.73 apiece on 30 October, before recovering to close at S$7.18 on Friday, 2 November. At Friday’s closing price, SGX was valued at a price-to-earnings ratio of 21.2 and a dividend yield of 4.5%.

Outside the top six big purchasers, Singapore Post Limited (SGX: S08) also bought back its shares and slotted into the tenth place in terms of share buyback amount. It clawed back 1.59 million of its shares from the market last month, spending S$1.76 million in all.

On 2 November, the postal outfit announced its financial results for the second quarter ended 30 September 2018. Revenue for the latest quarter rose 2.2% to S$368.7 million on the back of stronger contributions from international mail and property. However, net profit tumbled 12.9% to S$25.1 million, mainly due to exceptional fair value loss on warrants from an associated company. Without the one-off item though, underlying net profit would have inched up by 0.4% to S$28.1 million.

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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 Singapore Exchange Limited, DBS Group Holdings Ltd and SATS Ltd. Motley Fool Singapore contributor Sudhan P owns shares in Singapore Exchange Limited and SATS Ltd.