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

Last month, 29 companies bought back 39 million shares or units for a total amount of S$108.8 million, according to a recent report released by the Singapore Exchange. The latest buyback amount is 82% up from October 2018 and almost thrice that of November 2017’s figure of S$39 million.

The top ten companies with the most significant share buyback amounts in November 2018 were DBS Group Holdings Ltd (SGX: D05), United Overseas Bank Ltd (SGX: U11), Oversea-Chinese Banking Corporation Limited (SGX: O39), SATS Ltd (SGX: S58), Keppel REIT (SGX: K71U), Olam International Ltd (SGX: O32), Singapore Post Limited (SGX: S08), Stamford Land Corporation Ltd (SGX: H07), Sembcorp Industries Limited (SGX: U96) and Lum Chang Holdings Limited (SGX: L19). The companies spent a total of S$104.7 million for the share repurchases.

The trio of local banks accounted for around 81%, or S$87.7 million, of the total buyback amount in November. The SGX report stated that for the nine months ended 30 September 2018, the banks averaged 25% year-on-year net profit growth. They collectively saw their total income rise to S$24.2 billion from S$22.1 billion in the previous year. To know about the 2018 third-quarter financial performance of the three banks, you can head here for DBS, here for UOB and here for OCBC.

Keppel REIT’s manager has been regularly buying back the REIT’s units since July this year. As I noted in a previous article here, Keppel REIT repurchasing its units could be a signal to the market that its units are undervalued. The REIT’s manager mentioned during its earnings release for the 2018 second-quarter that it would “only purchase units when it is accretive to distribution and net asset value per unit”. Keppel REIT had a price-to-book ratio of 0.8 and a dividend yield of 4.8%, as of yesterday.

Companies which repurchase their shares could hint to the market that their shares are undervalued. Share buybacks could also cosmetically enhance the earnings per share of companies since the outstanding share count is lowered. My Foolish colleague, Royston Yang, recently looked at other reasons why companies buy back their shares. You can click here to learn more.

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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, United Overseas Bank Ltd, Oversea-Chinese Banking Corporation Limited and SATS Ltd. Motley Fool Singapore contributor Sudhan P owns shares in Singapore Exchange Limited and SATS Ltd.