(16-08-2011, 11:24 AM)Behappyalways Wrote: [ -> ]Using the information you have given, let's do a simplistic calculation.....Let's say a company called Hathaway has 100 shares and it is trading at 88 cents. Assets include 39.75cents cash/per share and 7.25cents other assets/per share and no debts and liabilities. Meaning NTA of 47 cents per share.
The company shareholder funds is $47 of which $39.75 is in cash and $7.25 is in other assets based on 100 shares.
Now the company does a share buyback at 88 cents per share and let's assume it does a 10% share buyback at 88 cents. A 10% share buyback would meant the company would buy 10 shares(out of 100) at 88 cents costing the company at $8.80.
The company would now have $30.95 in cash(after spending $8.80 on share buyback) and other assets of $7.25. Shareholder funds is now $38.20($47-$8.80).
With the 90 shares remaining(after sharebuyback of 10 shares), the remaining shareholder will have 34.39 cents in cash and 8.05 cents in other assets per share....NTA of 42.44 cents per share compared to 47 cents before the share buyback.
Nevertheless, I am using a very simplistic calculation of company doing a share buyback because a company might have certain intangibles assets in the company which is not assessed in this calculation and also ROE of the company will increase with share buyback as shareholder's equity is being reduced.
Hi there,
Thanks for the illustration. I am aware the journal entry to share buy-backs is as follows:-
Dr Share Capital
Cr Cash at Bank
So yes the share capital (equity) is reduced as the shares repurchased would be reflected as net of share capital (negative equity, so to speak), while cash is reduced on the assets side.
So while I agree that academically speaking, this does reduce the NTA of the Company, as mentioned there are many other factors involved in determining NTA which are dynamic in nature. Hence, this one transaction in isolation should not have a dramatic or drastic impact on NTA in the sense of reducing value for shareholders.
From a practical standpoint, I am simply glad that there are less shares out in the market which are entitled to dividends declared by Boustead, such that they can either (i) conserve cash by maintaining DPS or (ii) pay out more per share assuming total dividend amount remains constant year-on-year.
Thanks!
yes, buyback share above NTA will reduce the NTA at the moment. but from a long term point of view, the saving of dividend plus the growth of the company in the future will eliminate the effects of reducing NTA at the moment.
also, share buyback during confidence crisis and irrational sell-down like margin call/force sale does give the shareholders confidence that the fundamental of the company does not change.
For info, Boustead bought back 100,000 shares today at 88 cents/share, spending another $88,185.96 in the process. This increases treasury shares to 11.276 million at an average cost of $0.5012 (50.12 cents). If Boustead continues to remain under-valued, I am certain the Company will continue to deploy their cash hoard to buy back shares.
At 88cts, $455M market company with $200M Cash. $255M value for the business, generate $50M profit without leverage.
Ex-Cash, P/E only 5.1X
No wonder company is buying...
But I hope they deploy it to buy an even better business...
At 88cts, $455M market company with $200M Cash. $255M value for the business, generate $50M profit without leverage.
Ex-Cash, P/E only 5.1X
No wonder company is buying...
But I hope they deploy it to buy an even better business...
Boustead bought back another 376,000 shares today at 88 cents/share.
Total treasury shares now stands at 11.652 million.
Boustead continues to buy-back shares today. Another 335,000 shares purchased between 88 cents and 87.5 cents, and they have spent $295,218.20 on today’s purchase. Since Monday, Boustead has purchased 1 million shares exactly and spent a total of $881,654.86. Total treasury shares stand at 11.987 million and adjusted share capital is now 503.76 million shares.
The right time to buy is when the CEO himself buy.
After an absence of 1 trading day, Boustead has resumed buying-back shares. This time it's 30,000 shares at 84 cents/share.
Understandably, since the price run-up, Boustead has stopped buying-back shares.
Today, HanKore asked for a trading halt pending an announcement.
Boustead has invested $4,000,000 into HanKore by acquiring 100,000,000 shares at 4 cents/share. Current market price for HanKore is 4.5 cents, giving them an unrealized 10% gain at this point.
Biz Times had an article (in HanKore thread) stating that the Company should be profitable moving on, and hopefully cash-flow positive as well. This bodes well for Boustead's investment in this water-treatment company.
(Vested)
Business Times - 08 Sep 2011
Boustead unit bags $11m data centre contract
2,200 sqm facility is to be built in Tuas Biomedical Park II
By NISHA RAMCHANDANI
BOUSTEAD Singapore's industrial real estate arm Boustead Projects has landed an $11 million contract to build a data centre in Tuas Biomedical Park II (TBP II) for a Fortune 100 transnational healthcare and pharmaceutical company.
The data centre, which will span a gross floor area of some 2,200 square metres, will be built next to its client's existing manufacturing plant at the 188-hectare TBP II, Boustead said, without revealing the client's name.
With completion slated for Q2 in 2012, the data centre will integrate data storage activities to serve the Asia Pacific region.
'With the addition of this contract, we have secured approximately $77 million worth of new contracts since the start of FY2012 in April. We will continue to target opportunities across niche growth industries including the aviation, high-tech manufacturing and healthcare/bio-medical industries,' said Thomas Chu, Boustead Projects' managing director.
This is Boustead Projects' first project at TBP II, which hosts some of the world's biggest pharmaceutical names such as Abbott, GlaxoSmithKline, Novartis and Pfizer.
However, it is its third for the healthcare industry, after working on World Courier's regional distribution centre and logistics facility at Changi International LogisPark as well as a specialised hospital for Fortis Global Healthcare.
The latest contract also follows on the heels of other contracts announced in August, such as a $42 million contract from Kerry Logistics for a logistics facility at the Tampines LogisPark and $22 million worth of contracts for Boustead's energy-related engineering division from the oil & gas industries in Australia, Canada and the United Kingdom.
The contract boosts Boustead Group's order book backlog to $282 million.
(Vested)