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 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.” On that note, let’s check out three companies picked at random that have repurchased their shares thus far during…
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 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.”
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.
Silverlake Axis Ltd (SGX: 5CP)
Silverlake is a software solutions provider servicing mainly the financial services sector.
On 14 January 2019, Silverlake repurchased 1.5 million shares at S$0.4143 per share. The cost came up to slightly above S$622,600.
For its first quarter ended 30 September 2018 (1Q FY2019), Silverlake’s revenue rose 36% to RM 166.61 million while its net profit surged 70% to RM 57.94 million. The company said that all main business activities contributed positively to the revenue growth.
Looking ahead, Silverlake mentioned the following in its earnings release:
“For the rest of the financial year, the Group will remain focused on the implementation of software contracts secured in FY2018 and earlier. Progressive revenue recognition from these projects are expected to contribute positively to group revenue in FY2019 and FY2020.”
Silverlake closed at a share price of S$0.405 on Thursday. This translates to a price-to-earnings (PE) ratio of 20 and a dividend yield of 3%.
Singapore Post Limited (SGX: S08)
Singapore Post, or SingPost for short, has a history stretching back to 150 years. The company currently handles e-commerce logistics, as well as provides mail and logistics solutions in Singapore and around the world.
On 14 January, SingPost bought back 690,000 shares at S$0.95 apiece. It spent around S$656,300 on the share buyback exercise.
Revenue for SingPost’s second quarter ended 30 September 2018 rose 2.2% to S$368.7 million. The increase was 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 an exceptional fair value loss on warrants from an associated company. Without one-off items, underlying net profit inched up by 0.4% to S$28.1 million.
Shares in SingPost ended Thursday at S$0.98 each. The firm was selling at 24 times trailing earnings and had a dividend yield of about 4%.
Venture Corporation Ltd (SGX: V03)
Venture is a global electronics services provider that can support designing, manufacturing, and e-fulfilment of electronic products.
On 14 and 17 January, Venture repurchased 106,000 shares ranging from S$14.85 to S$14.90 apiece, translating to a total cost of S$1.58 million.
Venture did not perform well for its latest quarter. For the third quarter of 2018, the electronics services provider saw its revenue falling 27.4% year-on-year to S$770.4 million while net profit decreased by 27.5% to S$80.8 million.
Venture’s shares last closed at S$14.88 apiece on Thursday. The share price translates to a PE ratio of 11 and a dividend yield of 5%.
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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 does not own shares in any companies mentioned.