junior's toks

Shares Buy Back.....

I nearly forgot that this blog is supposed to tok about Malaysia financial issues...... ......I have been busy toking kok and nonsense in the past few weeks..TODAY, I finally WAKE UP...ok la...feel guilty liao...and found this interesting news:-

Pos Malaysia sells more treasury stocks
POS Malaysia & Services Holdings Bhd said it had sold 100,000 of its treasury shares to the market for RM268,000, further adding to the number of its treasury stocks sold since the start of this year. In a disclosure to Bursa Malaysia, the company said it sold the shares at prices ranging from RM2.66 to RM2.71. Following the sale, the company still held 35.998 million of its own stock as treasury shares, it added. In a separate announcement, Pos Malaysia said it had sold 490,000 of its treasury shares to the market for a total of RM1.35mil from Jan 1-20 at prices ranging from RM2.69 to RM2.82. – AFX-Asia

I did not have anything better to do just now so I went to the KLSE website to see how much those directors bot those shares for....You know what I found? I found an audited report in Bahasa Malaysia. There isn't the English translation version. I don't want to sound like an arsehole but I really cannot read BM very well. Don't laugh at me, try this - What is Syarikat Bersekutu? What is Instrumen kewangan diiktiraf di dalam kunci kira-kira? Don't cheat, I know you also dunno....:D

I can imagine this foreign analyst sitting at say Morgan Stanley in Singapore. If he had to analyse this, he would fall off his chair, and roll on the floor for at least 3 min. HE HAS NO CHANCE. Obviously, POS Malaysia is not interested in foreign fund manager.....

Wei, What am I toking about? I am supposed to tok about TREASURY STOCK. You see, many people keep harping on the point that company should never do shares buy back (shares that are bot back by company are usually held as 'Treasury Stock') because they make a mess out of it. The most obvious example is the MPI share buy back which cost money. Company seldom got it rite. They should not be. Because they know the company inside out.

Our friends in POS actually did nto mess it up. According to the Malay (tiu lor...am I racist??) Audited Report, they bot it at average of 2.20. They sold it for 2.60+...not bad, considering they hold it for 3 years.

For me, company should do share buy back. Not only it signal the confidence of the company directors, it also reduce the cost of funds. Ah...one more thing, if you have ESOS, share buy back is actually a hedge to this ESOS....ahh...u did not know leh.... See, if I issue ESOS and the share price run up, any ESOS exercise will dilute the share price. The Treasury Stock actually serve as a buffer to play down this dilution.

Dun say I never teach you something new....

Junior

posted by Junior @ 4:20 PM