At the begging of the year we published an overview of share buy-backs performed by Croatian and Slovenian companies. Now, with half of the year behind us, we decided to update the overview by looking at just how much of the total volume traded was generated through buy-back programs.
A share buyback refers to the repurchasing of the shares by the company that originally issued them. A buyback occurs when the company, which initially issued the shares, pays their shareholders a market value for the shares and in return gains back the shares that were previously dispersed among investors. Just like dividends, a share buyback can be used to return cash back to its shareholders.
Key reasons for a buyback:
- used to return cash back to its shareholders;
- the company wants to award their employees and management through stock rewards and option;
- the management deems that the stock is undervalued;
- the management wants to boost the company’s financial ratios (such as EPS);
- to prevent other shareholders from acquiring more shares (or a takeover).
Percentage of Share Buybacks in Total Traded Volume in H1 2019 (%)
Source: InterCapital Research
During the first six months, Adris’s share buy-back program accounted for 62% of the total volume recorded by the company’s regular share. Note that the bulk of the buy-back program came in February when the company concluded a share buy-back worth HRK 58m (for both regular and preferred shares). Furthermore, Adris is expected to continue in a similar fashion in the future as the company started their new buy-back program in June. The program is intended to buy back a of maximum 1.64m shares or up to HRK 900m, while the company is entitled to acquire up to 10% of their share capital. It is also worth noting that this is a continuation of the buyback program following up a program which started in March 2018 and ended on 16 June 2019.
In second place lies HT, whose share in the total volume of shares traded remained roughly the same, amounting to 27% (from 22% in 2018). In third place follows Atlantic Grupa whose buy-back program accounted for 25% of the company’s total volume. However, note that the aim of this buy-back program was to repurchase share which would later be distrusted to employees as a form of compensation.
Meanwhile, Krka’s share in the total volume traded increased slightly during 2019 and amounted to 18% (from 13% in 2018). Note that Krka was the only Slovenian company which performed share buybacks. On the flip side, Koncar’s contribution to the total volume traded decreased significantly and now amounts to just 1% (from 15% in 2018).
It is worth mentioning that on 28 June, Arena Hospitality launched their first share buyback program with the intention to purchase up to 20.000 of their shares. The mentioned buyback will last until 30 June 2020.
To read our earlier overview of share buy-backs in 2018 please click here.
To put things into a perspective, the deal would account for 2.1% of the company’s trailing 2019 operating revenues.
Ericsson NT published an announcement stating that they have continued their collaboration with HT Eronet by signing a frame agreement on expanding LTE network across Bosnia and Herzegovina (B&H).
The contracted work relates to LTE network (800 MHz and 1800 MHz), project management services, integration of new nodes into the network and training for this B&H operator’s employees. The company notes that they are the single vendor of HT Eronet’s radio access network.
The mentioned deal is worth HRK 34m. To put things into a perspective, the deal would account for 2.1% of the company’s trailing 2019 operating revenues.
Fondul reported a total NAV of RON 10.73bn (EUR 2.27bn) (+9.7% YoY) which translates into a NAV per share of RON 1.5112 (+13.7 YoY).
As Fondul Proprietatea published their NAV as of 28 June 2019, we are bringing you it’s short overview.
According to the latest NAV report, Fondul reported a total NAV of RON 10.73bn (EUR 2.27bn), which translates into a NAV per share of RON 1.5112. When comparing it to the same period last year, their NAV increased by 9.7%, while NAV per share increased by 13.7%. Meanwhile, when comparing MoM, Fondul’s NAV increased by 4.7%, while their NAV per share increased by 7.6%.
Fondul Share Price & NAV per Share (2016 – 12.7.2019)
Next, when observing the portfolio structure, it remains traditionally oriented towards the power, oil and gas sectors, whereby the two largest holdings, Hidroelectrica and OMV Petrom account for 59.4% of the total NAV.
Furthermore, when compared to the same period last year, the Fund decreased their listed equities (-1.3 p.p.), while their net cash & receivables increased by 1.3 p.p. Meanwhile, Fondul’s exposure to unlisted equities remained flat accounting for 70% of the portfolio.
Turning our attention towards the share’s price performance, as of 12 July, the share price amounted to RON 1.1, marking a 24.6% increase YoY. The discount to NAV per share decreased by 6.4 p.p. YoY and currently stands at 27.2%.
Fondul Price To NAV Discount (2016 – 12.7.2019) (%)
The last time the index recorded a level higher than the one last week was in January 2008, when the BET index reached 9,735.67 points.
Last week, the main index of the Bucharest Stock Exchange (BET) reached a 10 year high, closing at 9,091.29 points, highest since January 2008. This would represent an increase of 23% YTD.
The last time the index recorded a level higher than the one last week was in January 2008, when the BET index reached 9,735.67 points.
YTD Performance of BET Index
In the graph below, you can see the YTD performance of the BET index constituents.
As noticeable in the graph, 12 out of 16 components of the index, recorded a double-digit increase in share price YTD. Of those, Purcari observed the highest increase of 44% YTD, followed by Nuclearelectrica which observed a 38% increase. OMV Petrom and Banca Transilvania follow with an increase of 35% and 25%, respectively.
BET Index Components Share Price Performance YTD (%)