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$PWROOT (7237.MY)$ Recently, the company has been "buying ba...
Recently, the company has been "buying back" its own stocks from the market, this operation is called share buyback. In simple terms, the company uses its own money to repurchase some stocks from the market and holds them in its own hands (called "treasury stocks"). This quarter, they also spent RM 23.8 million to buy back over 16 million shares of their own stocks. Currently, they have repurchased a total of 25.1 million shares, these stocks are like a part saved by the company, not participating in trades, nor paying dividends.
Why do this? Why bother? To reduce the stock supply, allowing existing shareholders to earn more? After the repurchase, the number of circulating shares in the market decreases, for example, from 0.462 billion shares in the same period last year to the current 0.452 billion shares. With fewer shares, the company's earnings per share (EPS) naturally appear higher, is this generally a good thing for the stock price?
Maybe 🤔 the company wants to tell everyone "I have confidence in myself"? Share buybacks usually indicate that the management believes the company's stocks are undervalued, and the buyback is a signal? "I think I am very valuable, otherwise why would I spend so much money buying myself?" This also gives shareholders more confidence in the company's future?
With a lot of cash on hand, what is a good way to use it? The company has a substantial amount of money on hand (approximately RM 101.4 million). Instead of leaving it idle, it is better to use this money for share buybacks or dividends to reward shareholders.
On the positive side for investors, shareholders' benefits directly increase as share buybacks reduce the quantity of stocks in the market, hence increasing your earnings per share (EPS). However, if profits keep declining... that's not a good sign, right? I mean, if profits keep declining. The stock price becomes more stable, supporting the price and making it less likely to experience significant declines. Sorry, I don't believe... if it needs to drop, it will drop, of course, it will rise... it will climb, and even the highest wall can be climbed over.
What happens when the money runs out in the future? Using so much money for buybacks might look good now, but if the company needs to invest or expand later, these funds will be limited. What if buybacks are not profitable? What if the company spends a lot of money buying its own shares, but the stock price doesn't rise, then it could be a bit awkward. The company currently has 25.1 million treasury shares, these shares can be kept, used for future employee incentives, resold in the market for profit, or even directly canceled in the future to reduce the total stock count in the market, further enhancing shareholders' equity.
How much more do we need to buy back? Will the company continue to buy back more stocks? To what extent will they buy? How will these repurchased shares be used? Will dividends be distributed to shareholders in the future, or will they simply be sold off? Is there enough cash? Will such a large-scale stock purchase affect the company's future expansion and risk resistance capabilities? #InvestmentThoughts 🤔
Why do this? Why bother? To reduce the stock supply, allowing existing shareholders to earn more? After the repurchase, the number of circulating shares in the market decreases, for example, from 0.462 billion shares in the same period last year to the current 0.452 billion shares. With fewer shares, the company's earnings per share (EPS) naturally appear higher, is this generally a good thing for the stock price?
Maybe 🤔 the company wants to tell everyone "I have confidence in myself"? Share buybacks usually indicate that the management believes the company's stocks are undervalued, and the buyback is a signal? "I think I am very valuable, otherwise why would I spend so much money buying myself?" This also gives shareholders more confidence in the company's future?
With a lot of cash on hand, what is a good way to use it? The company has a substantial amount of money on hand (approximately RM 101.4 million). Instead of leaving it idle, it is better to use this money for share buybacks or dividends to reward shareholders.
On the positive side for investors, shareholders' benefits directly increase as share buybacks reduce the quantity of stocks in the market, hence increasing your earnings per share (EPS). However, if profits keep declining... that's not a good sign, right? I mean, if profits keep declining. The stock price becomes more stable, supporting the price and making it less likely to experience significant declines. Sorry, I don't believe... if it needs to drop, it will drop, of course, it will rise... it will climb, and even the highest wall can be climbed over.
What happens when the money runs out in the future? Using so much money for buybacks might look good now, but if the company needs to invest or expand later, these funds will be limited. What if buybacks are not profitable? What if the company spends a lot of money buying its own shares, but the stock price doesn't rise, then it could be a bit awkward. The company currently has 25.1 million treasury shares, these shares can be kept, used for future employee incentives, resold in the market for profit, or even directly canceled in the future to reduce the total stock count in the market, further enhancing shareholders' equity.
How much more do we need to buy back? Will the company continue to buy back more stocks? To what extent will they buy? How will these repurchased shares be used? Will dividends be distributed to shareholders in the future, or will they simply be sold off? Is there enough cash? Will such a large-scale stock purchase affect the company's future expansion and risk resistance capabilities? #InvestmentThoughts 🤔
In the short term, Power Root's share buyback is beneficial to shareholders, with possibly more stability in stock price and higher EPS, but it's important to monitor if the company's cash flow is flexible enough. In case of forex fluctuations or other crises, there might be pressure.
$TOPGLOV (7113.MY)$ In September 2020, the company conducted multiple share buybacks, repurchasing a total of approximately 44.59 million shares, worth close to 0.33 billion ringgit.
$GENM (4715.MY)$ On March 11, 2021, the company repurchased 2 million shares in the open market, with trading prices ranging from 3.15 to 3.16 ringgit per share, totaling approximately 6.31 million ringgit.
$TM (4863.MY)$ Telekom has conducted share buybacks multiple times in the past three years to enhance shareholder value.
Power Root's business is very simple, focusing on fast-moving consumer goods, mainly beverages such as coffee, tea, and health drinks. Brands you may be familiar with include Ah Huat White Coffee, Alicafé, and Per'l Café. Their main market is in Malaysia, accounting for 60% of revenue, with the remaining 40% in the Middle East and East Asia markets, such as China and Hong Kong.
This quarter, their revenue was RM 102.7 million, an increase of 3% compared to the same period last year, mainly driven by the strong performance in the Malaysian market. However, it decreased compared to the previous quarter, with export markets showing average performance. The profit is under some pressure, with a pre-tax profit of RM 10.6 million, 13.8% lower than last year. This is mainly due to rising employee costs, where the Middle East and export markets account for 40% of revenue, but the Malaysian Ringgit has been weak recently, leading to significant forex losses (RM 2.38 million this quarter). Advertising expenses and some costs decreased last quarter, so this quarter's profit slightly improved compared to the previous quarter. Raw material costs (such as coffee beans) are increasing, putting some pressure on profits.
Pure sharing, no buying or selling advice ...
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Jason onz : not as simple as increase EPS. besides EPs, there are other reasons why they buyback. increase stock price and increase its own shares volumes can ...... ........ ........... ! only those who has work in investment banking and good a business strategy, knows a bit better than textbooks scenarios.
Jaspherlim_my OP Jason onz : 你来自投资银行 ？
Jason onz Jaspherlim_my OP : yes, from investment banking.
Jason onz Jaspherlim_my OP : I expect it to reach rm1.35 at least, rm1.60 by June the earliest if conditions are favourable. windfall would be rm1.90 above by end of 2025. just my personal analyst.