Many Thai listed companies aim to buy back their stocks as prices fall. The Nation (Thailand)/ANN
Many Thai listed companies aim to buy back their stocks as prices fall.
Last week, four listed companies announced plans to buy back stocks.
Kasikornbank (KBank) said it would buy back 23.93 million stocks, accounting for one per cent of all paid-up shares, with a credit limit of 4.6 billion baht ($148 million) from February 14 to 27 this year.
Ch Karnchang (CK) will buy 169.38 million shares, accounting for 10 per cent of all paid-up shares, with a credit limit of three billion baht from March 2 to September 1, while Supalai (SPALI) will buy 120 million shares – 5.6 per cent of all paid-up shares – with a credit limit not exceeding two billion baht from February 12 to August 11.
TPI Polene (TPIPL) said it would buy back 383.61 million shares – two per cent of all paid stocks – with a credit limit not exceeding 800 million baht from February 14 to August 13.
The Stock Exchange of Thailand (SET) also found that in the previous month, 10 listed companies had bought back some 165.03 million shares valued at 270.08 million baht.
Meanwhile, Asia Plus Securities executive vice-president Therdsak Thaveeteeratham said fluctuations in the stock market would encourage many listed companies to buy back stocks, while it signals that the company’s stock is priced lower than its true value.
“This will help create confidence among investors, while it will benefit the stock price in the short term because the stock price will rise for one month after they announce their buy-back move.”
He explained that according to the data of 42 listed companies in the past 10 years, most of them often bought back stocks when the market fluctuation was high, while the SET Index often responded positively and rebounded in the next phase.
“This is probably because investors have responded to signals sent by executives that the share price has an interesting valuation for investment.
“However, for the stock price to continue rising, other environmental conditions, especially the support from fund inflows, would be crucial factors,” he said.
According to the research team’s analysis of the period of investment in buying back stocks in the past 10 years, the most suitable period is on the day of the announcement to make a profit in the next month.
“This period offers the opportunity to receive an average return of approximately 2.6 per cent [some companies return more than 10 per cent] because buying back of stocks is aimed at supporting the share price, while there will be expectations of an increase in earnings per share from a decrease in the number of shares.
“It also signals that the company’s executives think its shares are undervalued,” the member of the research team said.
THE NATION (THAILAND)/ASIA NEWS NETWORK
