Many companies conduct share buybacks, with the belief that their share prices are undervalued (and that utilising their cash reserves to buy back shares adds value to shareholders) and thus represent a good bargain. Some companies also buy back their shares to provide support for the share price, which may have been unfairly beaten down due to negative news flow or a poor financial report for the quarter.
Here are three companies which have repurchased their shares this week, including a short commentary on their results and prospects.
1. Kimly Limited
Kimly Limited (SGX: 1D0), or Kimly for short, is one of the largest traditional coffee shop operators in Singapore, and the group manages and operates a network of 68 food outlets and 130 food stalls across the heartlands of Singapore.
On 8 and 9 May, Kimly bought back 560,000 and 850,000 shares respectively at S$0.24 per share. The cumulative shares bought back as of 9 May stood at 3,460,700 shares.
Though Kimly’s net profit for the second quarter of 2019 fell by 13.2% year-on-year, the group doubled its interim dividend from 0.28 Singapore cents per share to 0.56 Singapore cents per share. Kimly has upgraded three of its central kitchens and continues to grow its online sales, and is developing its own brand of iced Kopi and iced Teh to cater to customers seeking healthier beverage options. Prospects look good for the company if it can manage to control its costs, which have ballooned significantly this quarter.
2. AEM Holdings Ltd
AEM Holdings Ltd (SGX: AWX) is a manufacturer of electronic components and provides solutions in equipment systems, precision components and related manufacturing services across various industries.
On 9 May, AEM bought back 100,000 shares at S$1.02. The share price of AEM had tumbled by 5.5% to S$1.00 after the company reported poorer earnings and weak guidance.
The company reported a 19.7% year-on-year drop in both revenue and net profit in its first quarter results announcement. This was due to lower orders from its main equipment systems customer. In spite of this, AEM aims to continue to work on developing accounts with other semiconductor manufacturers to diversify its revenue stream. The group has also expanded its capabilities through acquisitions in 2017 and 2018 and can now offer a wider suite of products to customers.
3. Tuan Sing Holdings Limited
Tuan Sing Holdings Limited (SGX: T24), or Tuan Sing for short, is a regional investment holding company with interests in property development, property investment and hotel ownership.
The group bought back a total of 750,000 shares from 6 to 8 May at share prices ranging from S$0.38 to S$0.39.
Earnings for the first quarter 2019 were weak, with revenue flat at S$77.5 million while net profit plunged 98% to just S$0.2 million. The poor performance was due to a combination of higher finance costs and also the absence of a S$3.9 million gain from the disposal of a China subsidiary which was booked in the first quarter of 2018.
While the results may look weak, the group has ambitious plans to participate in large-scale integrated developments and townships. This is part of its transformation plan as it approaches its Golden Jubilee in 2019. Tuan Sing will launch its Batam smart city project by end-2019 and will commence its Perth asset enhancement initiative in July 2019. In China, the group has initiated construction work on a landmark project comprising commercial, residential and retail components.
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The information provided is for general information purposes only and is not intended to be personalized investment or financial advice. Motley Fool Singapore contributor Royston Yang does not own shares in any of the companies mentioned.