CapitaLand, Southeast Asia’s largest real estate company, bought back 1.5 million shares yesterday, or 0.035 percent of its issued share capital, in its inaugural buyback exercise.
The group said it paid S$2.42 to S$2.45 per share, with the average price paid at S$2.435. Including clearing charges and stamp duties, the total consideration for the shares was approximately S$3.66 million.
The stock closed at S$2.46 yesterday, as it gained one cent from the previous day of trading.
Market analysts noted that the market’s reaction is expected to be positive as the share buyback move is viewed as a good “sign”, adding that it also provides a venue for capital management.
Tuck Yin Soong, Analyst at Macquarie, said the buyback is a “small, but important move” to highlight the attractiveness of the current share price of the stock.
“We think further share buybacks will provide support to its share price. Longer term, we do not rule out other capital management initiatives, such as lifting the dividend per share when CapitaLand reports its full-year FY2011 results next February.”
Sai Min Chow, Analyst at Nomura Singapore, said that CapitaLand management appeared to have stepped away from share buybacks during its H1 2011 results briefing. However, the group did not rule out the option of capital deployment.
“Capital management via share buybacks could have become more attractive following further correction in the share price since then,” said Sai.
“Share purchases or acquisitions allow the company greater flexibility over its share capital structure with a view to improving, inter alia, its return on equity,” noted CapitaLand in its latest annual report.
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