Companies buying back shares in bid to support stock prices

MANILA, Philippines - Companies are buying back their shares to take advantage of low prices after investors headed to the exit when the market saw the benchmark index fall to its lowest level in two years last week.

Henry Sy-led Belle Corp., for one, continued to implement its buy-back program, repurchasing 2.64 million common shares, days after the so-called Bloody Monday on Aug. 24.

In a disclosure to the Philippine Stock Exchange (PSE) yesterday, the listed property developer said it acquired P8.2 million worth of shares at an average price of P3.10 per share. 

This brings the company’s purchased shares to 25.456 million shares valued at P84.6 million.

The buy-back is part of the company’s program to repurchase up to P1 billion worth of shares, Belle CFO Manuel Gana said in a text message.

In an earlier disclosure, Belle said the buy back program was meant support its stock price.

Belle has been devoting significant resources to the development activities connected with its integrated resort project, the City of Dreams Manila, located within the 100-hectare Pagcor Entertainment City.

City of Dreams Manila is a joint venture with Macau-based casino giant Melco Crown Entertainment Ltd.

Similarly, ports tycoon Enrique Razon’s Bloombery Resorts Corp. acquired an additional 898,500 shares on Aug. 25.

“The purpose of the share buyback is to allow Bloom to acquire enough listed shares (while the share price is low) that will cover the total number of shares granted to certain officers and employees under the Stock Incentive Plan that will vest in the future,” said Bloombery, which operates Solaire Resort and Casino.

Gaming companies are buying back their shares amid a gaming slump that has been hounding the sector but other non-gaming firms are buying back shares as well.

Vista Land & Lifescapes disclosed to the PSE it purchased three million shares for P5.83 per share.

It appropriated P1.5 billion for the buy-back program. To date, Vista Land has repurchased P688 million worth of shares, bringing its outstanding shares to 8.43 billion.

Analysts said companies are taking advantage of the low price environment.

“They usually justify a share buy back operation when they deem the market to be undervaluing their stock,” Accord Capital’s Justino Calaycay said.

Last Aug. 24, the Philippine Stock Exchange index (PSEi) plunged by 487.97 points or 6.7 percent to close at 6,791.01, wiping out early 2015 gains and marking the sharpest fall in two years.