INSIDE MARKETS

Record yearly, monthly activities for share buybacks in 2008

By ROBERT HALILI

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2008 was the most active year in terms of share buybacks in the Singapore market with yearly and monthly records set in nearly all trade categories.

The buybacks in 2008 were a strong sign of support by listed companies as the Straits Times Index plunged by as much as 59 per cent, from the peak of 3,876 in October 2007 to a low of 1,600 in October last year.

The sharp fall in the market prompted 109 listed firms to record a whopping 2,711 repurchases worth $1.07 billion in 2008. Those were the highest yearly totals since buybacks were introduced by the Singapore Exchange in June 1999. The trade figures last year were significantly higher than the yearly averages of 25 firms, 712 trades, and $530 million from 2000 to 2007.

To show how heavy the buyback activity was last year, there were more companies that bought back shares in 2008 than the 101 firms that repurchased shares from June 1999 to 2007. The number of transactions last year also exceeded the 2,660 trades from 2005 to 2007.

The number of companies and trades in every month in 2008 were also higher than the monthly averages from 1999 to 2007. The most active month was October 2008 when the market reached its low with 51 firms that posted 523 repurchases worth $231 million. The figures were sharply higher than the averages in the month of October from 1999 to 2007 of seven companies, 60 trades, and $27 million. The numbers of firms and trades in October 2008 were also the highest monthly totals since 1999. September 2008 was the second most active month with 43 companies that recorded 449 transactions worth $187 million.

Investors should note that the heavy buyback activity started before 2008, as listed firms provided initial price support when the market started falling from the peak in October 2007. A total of 29 companies recorded 240 transactions worth $132 million in November 2007 and a further 20 firms posted 227 repurchases worth $93 million in December 2007. The buybacks in those two months were sharply higher than the monthly averages of 11 firms, 86 trades, and $56 million from January to September 2007.

Firms flushed with cash from robust earnings in 2007 continued to provide strong price support up to the end of 2008, thus resulting in the most prolific year for share buybacks in the Singapore market since its inception in 1999.

Top buyers and performers

The top 10 buyers in 2008 acquired a combined $824 million worth of shares during the year. The figure represented 77 per cent of the total value of repurchases last year. The company that bought back the most shares in terms of value in 2008 was property investor Hongkong Land Holdings, with nearly 46 million shares purchased from September to November worth $182 million at an average of $3.96 each. The group recorded 74 transactions during that three-month period at $4.55 to $3.20 each.

The trades by Hongkong Land last year were its first repurchases since buybacks were introduced in 1999. The price support might have prevented the stock from falling further, as the counter closed only 9 per cent down from the company's average buyback price to $3.62 in 2008.

The second top buyer in 2008 was United Overseas Bank with 6.7 million shares purchased from January to February worth $120 million. Despite recording buybacks in only two months last year, the group recorded a whopping 82 transactions during that period at $19.90 to $15.38 each. Prior to the trades last year, the company bought back 16.1 million shares from January to July 2006 at $14.73 each, and 36.4 million shares from November to December 2004 at $13.72 each. The counter closed sharply lower from UOB's average buyback price last year to $12.92 in 2008.

In terms of number of transactions, the most active company in 2008 was investment firm United International Securities (UIS) with 186 repurchases recorded from January to December. The buybacks totalling 1.75 million shares were made at $1.73 to $0.97 each or an average of $1.50. The price support was consistent as the group bought back shares in 10 out of the 12 months last year.

One surprising statistic, the company acquired significantly less shares in 2008 despite the stock trading at below its acquisition prices in 2007. UIC previously acquired 4.1 million shares from May to November 2007 at an average of $1.82 each. The counter closed 26 per cent down from the company's average buyback price in 2007 to $1.10 in 2008.

The second most active company in 2008 was medical equipment developer and distributor LMA International with 143 repurchases recorded from March to December. The group bought back 34.6 million shares during that period at 24 cents to 13 cents each or an average of 19 cents each. The price support was consistent as the company bought shares in nine out of the 12 months last year.

Unlike UIS, however, LMA bought back significantly more shares in 2008 than in previous years due to the steep fall in its share price. The group previously acquired 4.9 million shares from November to December 2007 at an average of 43 cents each, and 4.4 million shares from 2000 to 2001 at 80 cents to 52 cents each. The stock closed 27 per cent down from the company's average buyback price last year - to 14 cents in 2008.

In terms of price gains, the top performers last year were firms that bought back shares in the latter part of the year as share prices reached their lows. Specialist relocation solutions provider Chasen Holdings was the top performer, with its share price closing 23 per cent up from its buyback price to 28 cents in 2008.

The group repurchased 1.6 million shares from Dec 1 to 30 at an average of 23 cents each. Those were the company's first trades since buybacks were introduced in 1999.

Edible oil and fats producer Indofood Agri Resources also saw its share price close 23 per cent up from its purchase price in 2007 to 53 cents in 2008. The group bought back nine million shares in the second half of November at an average of 43 cents each. Those were the company's first buybacks since listing in 2002. The initial repurchases were made on the back of the steep decline in its share price since H2 June, from $2.87 each.