Warren Buffett is a huge advocate of businesses buying back their shares. In his most recent letter to Berkshire Hathaway shareholders, he reiterated his liking for share buybacks. He said:
“When earnings increase and shares outstanding decrease, owners — over time — usually do well.”
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.
The first company to be featured is Japfa Ltd (SGX: UD2). Japfa is a pan-Asian, industrial agri-food company headquartered in Singapore.
On 4, 6 and 7 March 2019, the company repurchased 1.2 million shares at a price range of between S$0.70 and S$0.715 per share. The total cost came up to more than S$856,000.
For the financial year ended 31 December 2018 (FY2018), Japfa’s revenue grew 10.8% year-on-year to reach a record high of US$3.53 billion. The increase was on the back of stronger performance across its main business segments. Meanwhile, net profit ballooned from US$1.3 million in 2017 to US$100.4 million in 2018.
Tan Yong Nang, chief executive of Japfa, commented the following in the earnings release:
“We were able to deliver strong revenue and earnings growth across our core business pillars in FY2018, against the backdrop of macroeconomic uncertainties and cyclicality of the agri-food business. This is a strong endorsement of our industrialised approach to farming and food production, and we aim to further strengthen our position as one of the most competitive and efficient producers of protein staples in emerging Asia.”
Japfa’s share price ended Thursday at S$0.70. At that price, it had a price-to-earnings (PE) ratio of 9 and a dividend yield of 1.4%.
Singapore Post Limited (SGX: S08), or SingPost for short, is the next company on the list. SingPost, on top of providing mail and logistics solutions in Singapore and around the world, also handles e-commerce logistics.
On 5 March, the postal outfit bought back 319,200 shares at a price range of between S$0.995 and S$1.00 per share. It spent slightly around S$319,000 for the share buyback exercise.
SingPost’s posted its third-quarter earnings on 1 February 2019. Here’s a summary of the latest financial performance:Source: Singapore Post Limited earnings presentation
The company said that the quarterly revenue growth of 7.6% was due to “higher peak season volumes across the Group”. The bottom line, on the other hand, was boosted by a one-off gain of S$28.2 million due to the dilution of SingPost’s interest in 4PX. Excluding all one-time items, underlying net profit would have fallen 7.5% to S$32.9 million in 2018.
SingPost shares closed at S$1.00 each on Thursday. The firm was selling at a PE ratio of 20 and had a dividend yield of 3.5%.
The last company on my list is Singapore Technologies Engineering Ltd (SGX: S63), a prominent engineering group.
On 7 March, ST Engineering repurchased 700,000 shares ranging from S$3.71 to S$3.72 apiece, translating to a total cost of slightly below S$2.61 million.
For 2018, the engineering firm’s top-line rose 2.7% to S$6.70 billion, but its bottom-line fell 1.7% to S$494.2 million. To learn more about ST Engineering’s latest earnings, you can head here.
ST Engineering’s share price ended Thursday at S$3.72. At that price, it had a PE ratio of 24 and a dividend yield of 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. Motley Fool Singapore contributor Sudhan P does not own shares in any companies mentioned.