Analysts from Citi Research and JP Morgan like that City Developments C09 has reignited its share buyback programme after a five-year hiatus.
On March 11, CDL announced it had bought back 304,400 for an average price of $5.84 per share while on March 8, the company bought back 954,000 shares at an average price of $5.75 per share.
“The continued buyback reiterates management’s confidence in its business and outlook as well as the significant value on offer with CDL's share price at a deep discount to the NAV per share of $10.12 and CDL’s estimated RNAV of $19.46,” JP Morgan says.
Citi Research says the share buyback sends five important messages.
First, it gives a clear signal that management views the current share price as undemanding.
Second, it shows management’s confidence in the company’s own fundamentals and growth potential.
See also: CDL initiates share buyback programme with purchase of 954,000 ordinary shares
Third, the buyback signals CDL’s commitment to strengthen its alignment with shareholders.
Fourth, at $5.75 and $5.85, the buyback represents potential NAV and EPS accretion.
Finally, the willingness to buy back its shares could mitigate the potential impact from short sellers.
To date, CDL has bought back 0.138% of its shares in issue. The share buyback programme enables CDL to buy back some 90.69 million shares.
