HOUSE 2 Billion Buyback
The board of 8890 Holdings, Inc. (HOUSE) has announced a PHP 2 billion share buyback program that will run until August next year.
The company assured that the program will not involve any active and widespread solicitation to sell back their shares. Majority shareholders will also refrain from participating in the program.
The company said that the purpose of the buyback program is to improve shareholder value. It is also used to manifest confidence in the company’s value and prospect through the repurchase of its shares.
What Does This Mean for You as an Investor?
If the firm believes that the stock is undervalued, it may initiate a buyback program. If the firm has excess cash and does not have any capital expenditure to spend it to, they can buy back shares and place them back in treasury.
What will happen is the number of shares outstanding will go down; thus, improving Earnings Per Share as the formula is Net Income divided by shares outstanding. If the denominator becomes smaller, EPS becomes bigger. Meaning, each investor gives a bigger chunk of the profits.
In turn, P/E ratio computed as Price divided by EPS would be smaller since EPS is higher. In terms of P/E, the lower the P/E the better.
The company also added that it plants to allot PHP 10 billion in capital expenditures this year. PHP 1 billion of which will be for a new hotel venture. The company continues in its core belief of providing affordable housing to the working class.
However, the company warned that they may start increasing prices of around 10 percent. This is in response to increasing borrowing rates as BSP has started to increase rates as well. Most property developers finance their project using bank financing or debt which they, in turn, have to pay interests as well.
Revenues and the company’s bottom line have been declining since the onset of the Duterte administrations due to the delays in the giving out of permits and results to delay in construction as well.
The stock has already made a new all-time high. If the stock will be able to close above 10.50 with volume, the stock may start to visit new unexplored levels.
Ayala Land Buys Out Japanese Partner
Ayala Land, Inc. (ALI) the real estate unit of the Ayala Group, has approved the buyout of the remaining 20 percent equity interest owned by Japan’s Mitsubishi Corp in Laguna Tehnopark Inc (LTI). A total of 8,051 common shares of LTI, valued at P800 million, will be bought by issuing 323.88 million common shares of Prime Orion Philippines Inc. (POPI). POPI is a subsidiary owned by ALI as well.
The company said that the transaction will strengthen POPI’s vision to be a leading real estate logistics and industrial estate developer in the country.
LTI currently manages the 460-hectare Laguna Technopark in Biñan and Santa Rosa and another 135-hectare property in Cavite Technopark in Naic. LTI has also announced that it is planning to spend PHP 1 billion for construction of logistics buildings and warehouse facilities.
PLDT Ramps Up Capital Spending
PLDT Inc (TEL) announced that it was once again increasing its capital expenditures for 2019 by another 25 percent to PHP 70 billion compared to PHP 58 billion a year ago. This is in support of its new initiative to provide 5G coverage.
Majority of the capital expenditures will be for fiber to the home and for wireless. The company has been aggressive in rolling out its fiber network to capture a huge portion of the market share. The country still has a huge portion of the broadband market that is not yet saturated.
As of the third quarter of 2018, its fiber coverage includes 2.25 million ports and 5.75 million households.
For the mobile segment, TEL is also keen on expanding coverage and capacity. This is to recapture a huge market share which it lost to its competitor. The company has already completed its 3-year roll out plan for 4G coverage and now covers 90 percent of municipalities and cities in the country.
The company estimates that it will be able to launch its 5G services to enterprise customers this year.
Over a period of 8 years, PLDT has continually increased its capital expenditures with a total accumulated spending of PHP 435 billion. The company has also changed its dividend policy. Previously, the company declares all its net earnings as dividends. Dividends for the past 8 years have started to fluctuate and even declined.
Tiger Resorts Asia Ltd. Completes Backdoor Listing
In a disclosure to the Exchange, Asiabest Group International Inc. (ABG) announced that a share purchase agreement between Tiger Resort Asia Ltd and certain shareholders of ABG has been concluded last February 4, 2019. The shares were transferred through a block sale.
Tiger now controls 66.67 percent of ABG or a total of 200 million shares. The value of the agreement is at PHP 646.50 million.
A set of controversies also affected the deal as gambling magnate Kazuo Okada tried to block the deal saying that it would be detrimental to the interest of the investing public. Accusations of numerous irregularities evicted Okada from his own company. Bribery violations ousted him as a director from a US casino operator in 2012.
Okada said that a backdoor listing can only happen once all pending cases regarding Okada Manila are settled.
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