4 Stocks This Week (Most Buybacks 1H20) [3 July 2021] Silverlake Axis; Global Inv; Golden Agri-Res; Hong Fok

The first half of 2021 has seen volatile swings within the stock prices. From continuing to develop at the start of 2021, to plunging on the back of COVID-19 uncertainties, to rebounding to close to 2021 levels.

Going forward, much uncertainty about the economy remains. This can have unpredictable effects on companies both in the short- and long-term. However, companies will know better than any retail or even institutional investors how well they are actually doing. While companies can simply say they believe in their business resilience or their share price is undervalued, one method to signal that is the case is by conducting share buybacks.

In the first half of 2021, 81 Singapore primary-listed companies conducted share buybacks, spending $663 million. This really is more than double what they spent in the first half of 2021, which amounted to $325 million, but under what they spent in the second half of 2021, which amounted to $836 million.

What is most apparent is that companies understand that these are uncertain times. Even though they have moderated share buybacks since second half 2021, what is more significant is that three quarters of their share buybacks happened in March 2021, once the Straits Times Index (STI), plunged close to 26% between 2 March 2021 to 23 March 2021. In fact, at $501 million, monthly share buybacks consideration in March 2021 was the highest since August 2021.

In the first 1 / 2 of 2021, DBS Group, OCBC, UOB and SGX led in total share buybacks, purchasing $431 million, $63 million, $20 million and $17 million respectively. In this article, we look at 4 non-STI stocks that led using the highest share buyback tally in first 1 / 2 of 2021.

Silverlake Axis (SGX: 5CP)

Silverlake Axis bought back more than 47.6 million of its shares amounting to $15.4 million within the first half of 2021. The average price per share (including costs) was $0.322.

Today, shares of Silverlake Axis are trading at $0.24, which is over 25% under the average price the organization paid to buyback its shares in first half 2021.

On 14 May, Silverlake Axis announced a 3% increase in revenue to RM506.8 million for that first 9 months of its FY2021. However, its earnings per share declined 29% to RM0.0477.

In the same announcement, it noted it foresees a challenging road ahead amid uncertainties brought upon by COVID-19 and US-China trade war. Nevertheless, it won contracts totalling RM65 million in the third quarter of its FY2021.

It also noted that it is an essential services provider towards the banking and finance industry. Regardless of the tough economic landscape, none of Silverlake Axis' customers terminated contracts or exercised temporary relief clauses.

Silverlake Axis also mentioned that government measures can create a new operating environment within the post-pandemic era, and the group is innovating with technological tools in delivering its services.

Global Investments (SGX: B73)

Global Investments bought back 80.1 million of its shares in the first half of 2021, totalling $10.6 million. The average price it paid (including costs) per share amounted to $0.132.

This is 4% less than what its shares are presently trading at today – at $0.137.

On 2 Feb 2021, it announced its FY2021 results, recording over two-fold rise in total income to $26.0 million. Its earnings per share grew from $0.0043 in FY2021 to $0.0116 in FY2021.

It also answered some questions associated with its investments during its Annual General Meeting (AGM), stating that it will take a cautious stance in rebalancing its portfolio of assets and adopt a selective approach in its investments, as well as maintain its policy to purchase a portfolio of assets in different sectors.

The company also had hardly any borrowings on its books, and stated it has assessed private equity investments which may require borrowings, but had not embarked on them due to unfavourable valuations VS financing costs.

Golden Agri-Resources (SGX: E5H)

In December 2021, Golden Agri-Resources was dropped in the STI, making way for Mapletree Logistics Trust to replace it.

In the first half of 2021, Golden Agri-Resources bought back 42.7 million of their shares for a total thought on $8.1 million. On average, it bought back all of its shares for $0.189 (including costs.)

Its shares are trading at $0.15 today, that is a 21% discount to the average price it paid during its share buyback in the first half of 2021.

In its first quarter of FY2021 results announcement, it reported a 2% rise in revenue to $1.7 billion. However, it sunk into the red, posting a net lack of $95 million, compared to a profit of $18 million in the first quarter of FY2021.

In its announcement, it also noted that its business is in food and biodiesel industries are deemed essential through the government. Leading the way in sustainable outcomes globally, additionally, it stated that Golden Agri-Resources is really a preferred supplier.

Restaurants and hotels closed, while households experienced an increase in cooking, has mitigated the outcome on demand for palm oil. Golden Agri-Resources also notes that short-term volatility in its crude palm oil may persist, and can be buffered against demand for food usage compared to crude oil prices. There is also health supply and demand, with limited growth in palm oil supply this season, which was affected by drought minimizing fertiliser application.

Hong Fok (SGX: H30)

Hong Fok bought back 11.5 million of their shares for a total thought on $7.1 million. It paid an average of $0.621 per share (inclusive of costs).

This is 14.3% lower than its current share price – trading at $0.71.

Hong Fok, which is in the property business, reported a 14% decline in revenue in its FY2021, which dipped $113 million. Its net profit declined 57%.

With existing development projects primarily in Singapore, sales may be slower amid the uncertainties induced by COVID-19. It also has a portfolio of investment properties in the hospitality industry, which will be influenced by the restrictions in tourism, and commercial and retail properties, which may similarly experience a slowdown.