This exercise is to test out the theory of the risk on the buybacks...

** note: Share buyback is noble and by itself, does benefit shareholders. Googleable. Pls do search and read **

Yes, what if the buybacks is done wrongly? Or even abused?



See we understand and know that TopGlove has bought a shit load of shares. Day in day out buyback, continuously for so many days already...
So it would be good that we tabulate out the number of shares they bought and the monetary value of the shares it bought....

Share buyback is nothing but buying shares. Examining Top Glove style of buying shares, if it good, we could learn from it, yes?
We could also see the buybacks from the theory of Dollar Average Cost buying? Does such buying really work?

But if the way of TopGlove buyback is bad, hey don't you think it is hell of a great idea to learn from TopGlove mistake? Yup, learning from our mistake is always the best but learning from other people's mistake(s) is heck a lot better. (some famous bugger did say this, yes?)

Notes:

1. Table track buybacks since 9th Sep.
2. TopGlove did have existing Treasury shares, which was then credited with bonus shares arising from the recent bonus issue. Hence, the total shares purchased WILL be different than the total of Treasury shares.
3. I am human. I could make mistake. Do verify the numbers and yes, if could, do inform me and I will correct.



Total number shares bought during this period.... 158,036,900
Sum paid for these shares = RM1,147,288,926.33

Average price for these shares is ... 7.259627

Closing price of Top Glove on 27 Nov = 6.99

Marked to market, the total market value of these shares bought back is 1,1204,677,931.00

Current marked to market prices losses is 42,610,988.33

extended profit/loss calculations based on various assumed prices... see post #22


*** table will be updated once a week ***
*** link to the updated post will be edited into this posting ***

Link to updated table for week ending 4 Dec 2020 - post #32
Link to updated table for week ending 4 Dec 2020 - post #87

This post has been edited by Boon3: Dec 18 2020, 07:53 PM

I have questioned Top Glove style of buyback.

This is because the prudent way or ideal way to buyback is to either....

1. Prevent the share from falling drastically (esp on days when there is intense selling pressure)
2. Buying based on the theory of 'value'

Or the simplistic buyback when the share is falling and do NOTHING when the share is rising.

Doing NOTHING when the share price is going up is most important.

On the 26th Nov, see the daily chart below



The share price rose significantly that day, yes?

But Top Glove splashed out 9.978 million on buyback that day.
Min price was 6.90.
Max price was 6.92.
Source: https://www.bursamalaysia.com/market_inform...?ann_id=3108687



Is this a smart way to buy shares?

Or is this a reckless way to buy shares?


11 Sep.. this day was way too drastic!!

The trading detail of Top Glove on that day..
Open price 6.45
high 8.03
Close 7.76
That was a great day for Top Glove shares.
On that day, Top Glove bought back 13,420,000 shares valued at 99.972 million.
Price range of the buyback = 6.2 to 8.00

Source: https://www.bursamalaysia.com/market_inform...?ann_id=3087742



Is there a reason why Top Glove share buyback to be so aggressive that the price bought back ranged from 6.20 to 8.00?

Well? Top Glove goreng the hell out of their shares that day!! That's the only way I can describe it.

based on simple examples such as this, my view is that Top Glove is way too aggressive and reckless with their buybacks....


So far... 1.147 billion has been splashed on buybacks.

If the intention was to reward the shareholders with Treasury shares, I am sure some would just want the cash than to see the company doing such buybacks,


This post has been edited by Boon3: Nov 28 2020, 09:27 AM

Good stuff
Under current fiscal conditions SBB is a no brainer good deal provided the company have sufficient cash and fundaments remains strong

Good for owners and management, bigger bonus if share price is good
Good for company, source of financing and good reputation to investors and shareholders
Good for investors, can hold for long & reasonable return
Good use of cash, minimize inflation loss and leverage on low interest financing

Tq. Do see amended second post.

Yes, technically I am for buybacks, without a doubt, which is common knowledge in investing.

However, the point is, what if buybacks are done wrongly or abused?

this posting explores that issue........

SBB is a channel for controlling shareholders to cash out at market price without impacting market price.

This post has been edited by icemanfx: Nov 28 2020, 10:16 AM

My theory is TopGlove is very confident about its cash position and is very likely to report estimates beat on quarterly profit in the next few weeks.

The market expectation for Top Glove's 2021 net profit to be between 10 billion to 12.5 billion.

Everyone is expecting a boom boom pow time for Top Glove in 2021. This is probably undisputed.

This post has been edited by Boon3: Nov 28 2020, 10:46 AM

The Bond issue

When there is aggressive share buyback, as an outsider or a minority shareholder, we need to examine if such reckless buybacks benefits the minority or the insiders?

That's logical to ask, logical to know right?

Or should we be the other people's money who are ever willing to be taken advantage of?

The 911 insane buyback...

On the 14th, there was this announcement...

https://www.bursamalaysia.com/market_inform...?ann_id=3087833



Back in 2019, TopGlove raised money via exchangeable bond....

https://www.theedgemarkets.com/article/top-...hangeable-bonds

Quote: “The bonds may be exchanged into new Top Glove shares at the option of the bondholders during the exchange period. The initial exchange ratio shall be 656.0767 Top Glove shares per US$1,000 in principal amount of the bonds

So 2,005,073 new shares listed.
Their cost price is 2.03 !!!!!

And just a couple days earlier, Top Glove on 9/11 splashed 99.972 million buying back (or in my opinion, goreng up their shares from 6.20 to 8.00

The exchangeable bond which were converted into shares were listed on 15th Sep.
Top Glove shares closed at 8.58 the previous day.
That should be worth more than 17 million ringgit.
The cost is about 4 million

A cool 13 million profit for the bond holders ....

WOW!

Exactly.

Edit:

And since then, there were many more conversion of shares!!!!

https://www.bursamalaysia.com/market_inform...=&dt_ht=&dt_lt=

Do go take a peep

This post has been edited by Boon3: Nov 28 2020, 10:57 AM

As these profit is widely expected, almost certain is priced in current share price.

on sbb kept at treasury; topg could either pledge to i.b for more cash for further sbb, cancel these shares or unload to the market. it will be interesting to see what topg will do with these sbb kept at treasury.

These call option bond holders were lucky. whether share price was pushed up to benefit these bond holders is another story.

given elevated asp and topg share price is unlikely to last beyond 2021, it is prudent to take money off the table.

This post has been edited by icemanfx: Nov 28 2020, 11:01 AM

The ESOS issue...

You know, when the company is going to embark on billion dollar buybacks scheme, the management and the Boss should know damn well that there should be no selling of shares or what not.... why risk the market questioning the integrity of the company? Right? 101 basic.

https://www.bursamalaysia.com/market_inform...=&dt_ht=&dt_lt=

There was countless listing of ESOS since Sep 2020... ESOS which are dirt cheap...

And the problem is, at it is, there is no way we know exactly if all ESOS shares were exercised and then sold for thousands or millions in profit.

Insiders selling...

this one .... https://www.bursamalaysia.com/market_inform...?ann_id=3101328

the remarks in that announcement ....



and the disposal price is 8.98.

Nice one Mr. Lim Cheng Guan ....


That certainly did not help. Not when you are a Lim. People will start asking .....

This post has been edited by Boon3: Nov 28 2020, 11:04 AM

Share price is paper or syok sendiri value; unless cashed out, can't use it to buy g650/global7500, lurssen 150m, penthouse adjacent to central park and hyde park, etc. it is sensible and prudent for shareholders to liquidate at elevated price.

it is normal and popular for major players to have multiple nominee accounts. only retailers expect to trade in own name.

if retailers could cash out for profit, so could major players; it is a fair game.

This post has been edited by icemanfx: Nov 28 2020, 11:27 AM

More on the bonds being exchanged into Top Glove shares.

Because of the recent bonus issue, these bonds are granted bonus shares too...

Source



Max scenario of the bond conversion is 20.249 million new shares...

Are the bond holders converting and then selling their shares?

That is the money ball question that needs to be answered.

This bond was issued in 2019; these bond holders were lucky and blessed like those bought and kept shares from that time.

This post has been edited by icemanfx: Nov 28 2020, 04:38 PM

Why didnt share all these in the stock discussion forum?

Sharing there can have a more discussions ma

Cause I want to keep track of this posting.

Okay?

And yea..one can easily ignore this posting if they no likey.

I ought to believe that they are doing SBB to buyout the proxies' holding.

I have been hearing this lately

Care to share the details...
Heard about this too 🙏

If u know...

Hahaha... rumors!

Worst of all, such rumor is so damn difficult to confirm. Yup, how to confirm? Currently all based on heresay.

However, what's starring right in front of us is.........

1. Lots of ESOS being exercised on...
2. Lots of Bond holders are converting their shares...

Well, lots of new share, which are as expected but these shares have SIGNIFICANTLY much lower prices and these new shares could be sold.
The bond shares is the bigger worry.
That's 20 million shares which could be converted and sold for a very, very handsome profit. MILLIONS!

Normally, I would say, for the ESOS holders, well guys/gals you deserve it. But when you hear that the Executive Director, Lim Cheng Guan, also doing the same ( posted on this issue b4, see post #3284 in Oct) exercising 380,000 shares at a price of 1.70 and selling at 8.79 and 8.98 during a period when the company is doing aggressive buyback, that's a no no. Big NO NO.

The company and the boss should know. Such stuff is easily frown upon by the investing community and the market.

You cannot exercise/sell ESOS or dispose shares when the company is doing buyback. Accusation is simple. Is the buyback enabling the selling to be done at a much higher market price?

The 20 million bond shares issues. Do we know who the holders are? And once again, when these bond holders are converting and when they sell the newly converted shares, these holders will profit handsomely! And because buyback is happening at the same time, accusations will fly. Is there a coordinated effort between the conversion of bond with the share buyback?

These 2 issue is such a massive concern imo.

Did another table ....



First column, COST = the total cost of the share buybacks since 9th Sept

Second column, NUM SHARES = shares bought back during this period

from there, this table is created. I created the third column, share price. Which calculates the value of all these treasury shares based on the share price displayed. ie. If Top Glove is trading at 8, one could know what is the marked to market price of these shares bough back. And from there I could do a simple assumption of the profit and loss

Share Price = share price.
Market Value = market value based on the previous column share price
Profit/loss = profit/loss based on the previous column share price

so for example, the table shows if TG is trading at 8, the share buybacks would have been worth 1.26 billion, which means that the share buybacks is worth a 117 million more.

and if refer the table, if TG is trading at 6.60, these share buybacks would have a loss of 104 million in value!

Yup, the figures are massive. Understandable. This is due to the sheer size of TG's buybacks.

Aggressive buyback, yes?


Once more... if the share buybacks are done with a 'noble' intention to reward the share holder by giving these buybacks as a bonus, wouldn't it be better if the company just give plain old cash back? Money is always better, yes?

There is no smoke without fire. 90% of rumours in this country turn out to be true.

An experienced fisherman could tell from rod movement what fish is hooked under the water. similarly, if one is experienced, could tell intention or objective of corporate exercise.

Treasury loss of $104m mean cashed out shareholders gain. believe many retailers have also sold at these or higher price.

after this series of sbb, dividend will be declared to calm sentiment.

This post has been edited by icemanfx: Nov 29 2020, 11:47 AM

boss, today got buyback...just letting you know (to keep track) tq

https://www.bursamalaysia.com/market_inform...?ann_id=3110267

Recorded in my Excel worksheet already.

Will only update posting once a week la.

Else, I will get complain saying I everyday post 'negative' news on TopGlove la.

TQ anyway.

I would like to give applause to TS. Good job!

Investors should be smart not falling into trap.

https://www.theedgemarkets.com/article/trop...op-glove-shares

Mr Boon, whats are your thoughts/opinions in regards to this news? indirectly SBB perhaps? mhmm why tan sri would use tropicana to buy TG?

No stress boss, won't complain or anything. would accept any opinions with an open mind tq tq

topg will likely distribute these sbb/treasury shares as dividend.

This post has been edited by icemanfx: Dec 4 2020, 12:39 AM

$79m is about daily sbb amount; for reason, topg didn't sbb today.

there could be a few reasons why tansri bought with tropicana; it is not uncommon for shareholders to have sold high and buy back at low price. expect a price rally before qr on next wednesday. Use Tropicana to cash out/SBB.

This post has been edited by icemanfx: Dec 4 2020, 01:16 AM

No problem. I shall reply you later when I read up more on it. But not on this thread.

Big player game very hard to understand

Update for the week ending 4th Dec 2020



Total number shares bought from 9th Nov to 4th Dec... 175,800,100
Sum paid for these shares = RM1,267,158,283.99

Average price for these shares is ... 7.20795

Closing price of Top Glove on 4 Dec = 6.65

Marked to market, the total market value of these shares bought back is RM1,174,344,668.00


Current marked to market prices losses is RM98,087,618.99

Could distribute these treasury shares as dividend and no losses would be booked.

Update ....

nice tracking

Tq. Hope you understand my message. Nothing against buybacks but one needs to realise how the company buyback is important. If badly done/managed or even abused, the buyback can actually hurt the shareholders.

This post has been edited by Boon3: Dec 5 2020, 12:31 PM

tq tq noted. like you have mentioned, TG been doing it quite aggressively. Tropicana bought into top glove share which means they are losing money atm

"Based on a back-of-the-envelope calculation, the property developer paid an average of RM6.97 per share for the lot." - from the Edge news
haha TG closed rm6.65 on friday

Well, some believe Tan Sri is kinda enough to distribute the wealth of TG...

Oh well, I believe Tan Sri might give them RM100 and shoo them off...

Not if you know them and view from them.

tansri could distribute these sbb treasury shares as dividend.

Distribute wealth? Do you really believe all such rumours. Lol. That's the easy way out, isn't it?

How about if I say the boss is way to determined and relentless in trying to maintain his stock's market cap?

Why not? Company got profit windfall ma. He wants his stock market cap to challenge Maybank. Understandable. Sudden extreme richness brings extreme wishes....

So could this be why his aggressiveness in buying back the stock, trying to maintain certain top price for his stock?

No matter what... right now... the way the company is buying back the stocks is not good for the shareholders. Current prices indicate a paper loss of close to 100 million. If the stock reaches a low of 6, losses will be over 200 million.

If one is the shareholder, one has the right to ask.. Wtf.

If you want to reward is, give us cash.

The way the company is conducting its buyback, the shareholders rewards dimishes!!

Personally I think the boss is preparing his move for next takeover. All those shares can be used to offset his next big purchase just in case if they are still interested to stay related with gloves. It would not reduce/dilute his shareholdings in TG.

Quite clear Tropicana has the money but then it's not really that rich cos whatever money Tropicana has, it's limited cause tropicana own financial obligation is massive. Their QR shows they need to finance their massive loans which at the mement cost roughly some 30 million plus in interest per quarter. To buy more is sending Tropicana on a first class jet to Holland....

Maybe tan Sri persuaded trop directors to buy & promise TG stock will hoot to the moon & give dividend kaw2..
😂

Maybe he is way too possessed that his stock should trade higher than Maybank's market cap.

Cash is king, should have waited for the price to fall further to flush out those using margin trading.

Yup. In regardless of whatever theory one may have, as it is, clearly the execution of the buybacks is very poor.

One literally has a mountain of cash (1.2 billion) ... and yet the buyback is showing losses of close to 100 million.

However, those who sold to sbb have a mountain of RM 1.2bn cash.

If vendors didn't sell, this paper loss would be their's. Smart and wise move by vendors.

This post has been edited by icemanfx: Dec 5 2020, 08:19 PM

With enough cash on hand, flushing our margin players could occur. A dog eat dog bone scenario.

This post has been edited by icemanfx: Dec 5 2020, 08:18 PM

Ahhh..... let me say this on the marked to market prices of these shares bought back.

From the Star biz:



Source: https://www.thestar.com.my/business/busines...glove-share-buy

There lies the issue with buybacks...

Companies doesn't need to report the end result from their buyback actions.

If right now, TG gives these share buybacks as a reward to its share holders, how many share holders are wise enough to realise that the way the shares were bought back, they had actually received 98 million less in dividends.

Yup... this is the way it is.

So before one goes yippee kay yay over buyback shares as dividends, do realise that perhaps an outright cash dividend is simply much better!

Most retailers miss the forest for the tree; as long as they are making money, they don't care or bother with macro picture.

This post has been edited by icemanfx: Dec 6 2020, 01:14 PM

Share this to the stock market discussion (98m less)

No need la. Most there only see what they want to see.

In accounting point of view, if the company making some loss in normal business circumstance, the loss can reduce the taxable income which mean pay lesser tax.
In SBB circumstance, if company spending cash to SBB and making loss, how does it affect the financial book? Are they entitle to pay less tax?
If not, is the act of SBB in this case in the best practice and benefit the shareholders?

What I know is buybacks is not tax deductable.

Well.. based on current data, would you want cash or distribution of the shares bought back?

The money should be used for reinvestment and generating more profit or rewarding shareholders by distributing dividends rather than SBB with my 2 cents.
It's a very good lecture class in this topic.

Maybe EPF needs money very badly at the moment and TG providing support? haha

If topg is to distribute these sbb treasure shares as dividend payment, is a reward to all shareholders.

Oh, yes. That's one of at the arguments on Wall Street currently. Many large corporations used money extensively for buybacks which ultimately left not much money for reinvestment and research. There was even an article on WSJ recently.

Clearly, if I was a Top Glove shareholder and seeing how badly executed/managed the buybacks, I for one, would demand cash dividend.

IMO, there may be something which the owner and the shareholder is doing at the back to prevent the stock from going down further, end of the day TG was always on the spotlight during recent times. From the dorm issue, lockdown on multiple factory due to workers infected with covid, kena sue by gov for their issue.
I think they wanted to maintain the stock price at certain target so they can list their share on HK at a better price or maybe founder ambition to be top 500 company in the world.

Yes, preventing the stock from falling, is a noble idea but what about the day when almost 100 million was splashed on buyback with price ranging from 6.20 to 8.00. Do see posting #2.

What is the purpose of listing in HK?

TG is cash rich and splurging on SBB, should need to raise more case from HK. 😆

So basically as of today closing, the loss is down to around RM 20mil..... After QR result out tomorrow and somehow the price higher than RM 7.20, so is the SBB a wise move?

I sense sacrasm.

Is okay. No problem.

Refer back to the first posting. This posting is to explore the risk in share buybacks.

Everyone can tell why share buyback is good.

The problem is, what if the share buyback is poorly executed/managed/abused?

Do refer post 1 and post 2. Esp look at how insane the share buyback was done on the 11th. The buy back was from 6.20 to 8.00. Which meant the stock flew just because of the buy back.

The table you referred to was a quick reference table. Don't you use one yourself? Many do. It's just a quick reference to know at what price, one would instantly know one's share is doing at a particular price.

As such, there is no conclusion that can be drawn from the table... unless Top Glove declares outright that they are done buying back shares for now.

Is Top Glove done buying back its shares?

No sarcasm here dun worry...

I’m not a pro to determine whether the SBB was executed well, I also dunno what’s the true purpose of the SBB, but you highlighted that the SBB made a paper loss at average RM 7.20, so from a normal trader view, if let’s say the share gain back and above the average SBB price, I dun see any problem with that....

No need to be pro or not la.

If buy back was supposed to be a form of rewarding shareholders, as a shareholder, dont you want the company to buyback the shares as cheap as possible? Or do you just want the company to sapu the share at whatever price available?

Think about that... That's the key.

Look at the examples highlighted in the second post.

26th Nov.. share already went up 20 sen.. but Top Glove decided for dunno what reason it needed to splash 10 million on share buybacks. Share already up... still buyback meh?

11th Sep. Stock opened 6.45. It fell to 6.15. Okay TG started buying back from 6.20. Okay what. Rational and logical decision. Right?

But TG on that day.. went gila. From 6.20, the buyback handbrake broke. Non stop. Sapu. Sapu. Sapu all. See what, sapu what. All the way to 8.00.

Need a pro to be the judge meh?

99 million was spend just like that on share buyback.

Just like that.

Be the judge lo..... If you own shares in TG, that's actually your money.

Well maybe they felt the price is undervalued during that time and just allocate the funds to sapu ? Mana tau kena COVID case then share price start to plunge... So continue to sapu after that....

Or maybe they realise their earlier mistake when they simply sapu, so after that they trimmed down the amount of SBB and spread it over more days....

Like I mentioned before, we dun know yet why TG doing all these SBB, maybe they’ll announce it tomorrow and we’ll know by then. Ultimately, as long as in the end the SBB average price is not in loss position then ok liao...of course as at today it’s still paper loss....

Wow. 2 simple examples given to you.

Okay.

Is always okay. Everyone have their right of opinion. I won't force you to change yours.

Have a good night.


And yea...my estimate is 3 billion profit for TG.

in order not to kena windfall tax, top glove agreed to buy share from EPF as EPF needs alot of money to give out to citizen.

just my guess

Focus is on how... how the share buybacks are conducted. If one is a share holder, isn't this more important?

EPF... delicate situation... Why did epf buy Top Glove shares in the first place? This action created a severe conflict of interest as Top Glove boss sits on epf advisory boss ( yea, from this perspective, say hello to Tropicana purchase of Top Glove shares)

Like Boon said one has to look at whether the share buybacks are a smart move.

Tech has been successful in deploying it but what one of the greatest destruction of capital happened to the oil majors as below:




Exxon has been so stubborn in defending their dividend and they were even willing to pause their contribution towards their employee retirement plans.


So one has to ask is the capital really deployed well enough so they don't repeat the mistakes of the oil majors and while Top Glove isn't anywhere near those mistakes yet but can they avoid do something similar.

This is a good read too!

https://www.wsj.com/articles/stock-buybacks...now-11607185864

FGV last traded today at RM1.27, down 72.1 percent from its RM4.55 IPO price.
https://www.malaysiakini.com/news/554410

Need not look far for capital destruction. rumours said, more glc/plc privatization is in the pipeline before ge15.

This post has been edited by icemanfx: Dec 9 2020, 01:06 AM

TGs cash flow from its latest QR...


It has promised to pay a special dividend amounting to 1.3 billion.

Pretty suggestive on why no buybacks lately.

Which also could explain why Tropicana got itself into buying TG.

Thank you

Personally I am for it in places where there are cap gains tax as long as it is responsible buybacks.

GS had a good research piece on it from last year.

https://www.goldmansachs.com/insights/pages...ties/report.pdf

I bet someone from TG is reading this thread
probably have cascade to uncle Lim

Please let us know if they did reach out to you

This post has been edited by yehlai: Dec 11 2020, 01:12 AM

Yup.. that's the key word isn't it?

We all know from theory that buybacks is good but it could go badly wrong if the buybacks is badly managed ... where in Top Glove we saw ....

Buying recklessly ... you cannot have the buyback do what as highlight in the 2nd post. Buying back from 6.20 all the way up to 8.00 simply cannot be justifiable by any means... TG splashed 99 million ringgit on that day.

and buy spending too much on buyback.... the strain will be there on its cash flow.

Again we saw that in TG.



All in ... this will be a good case study.... so that the next time we see a company doing buybacks, it's best not to assume it will be good for the stock.


(will read that link later... thks!)

It''s looking so rather clear.... he is way too obsessed with being no.1 . Way too determined trying to be a bigger stock than Maybank...

To be bigger than Maybank... you need to beat Maybank's market cap....

and what have we seen?

1. He used share buyback.... his 1.2 Billion war chest .... was literally gone just like that...
2. His position in EPF ... which meant there was conflict of interest, esp if EPF went on a buying spree of TG. And yes, EPF went in aggressively until lately....
3. His position as chairman in Tropicana .... he got Tropicana, a property stock to spent 78 millions buying TG shares....
4. Just yesterday, it was disclosed, the boss used his company, Top Fortress Ventures to buy shares in TG. Some of the directors joined the buying (but relatively small buyng)

Doesn't the boss appear to be possessed or what?

This is the stock market we are talking about. If the company is worth its weight in gold, there is no need for all this, right?

Just imagine ... current proposed dividend due xmas eve was 1.3 billion... and if the boss did not splashed the money unnecessary on these share buybacks... the boss could have given a dividend of 2.5 billion!!! Yeah... and then, there was a 2 billion plus investment in the money market fund. Why need to bother with such trivial stuff? I wonder if the boss is badly advised or what? Just imagine... throw this 2 billion plus as dividend.... ooo lalal... we could have seen Top Glove giving a record quarterly dividend of 4.5 billion back to shareholders......

think about that....


the stock could easily have traded past 20 bucks now... yup right this very moment.

... no need all these share buybacks.




yup.... think about that...



and sadly what do we have now? The boss is looking desperate to defend his share price... his integrity is put into question ....

TG want to be listed in HKSE
probably this is the prelude for his next move
once it's listed there this 1-2 billion will be like small change easy peasy money flow back to his pocket

This post has been edited by yehlai: Dec 11 2020, 12:27 PM

Yeah... he wants to be listed on hkex.

But its already listed in Spore. Not enough? Baffling.

For me, it just goes to say he's way too over ambitious. Wanting this and that when his company hits extreme richness.

This was out yesterday. Felt more like downgrades given...

https://www.theedgemarkets.com/node/545353?...Tv2zsYUDv68jOrI

Now his company was hit by us CBP.. and then his workers got hit badly with the c19.. One of the reason was crammed up and unhealthy living condition (how would it effect its CBP case?)... in which, some will ask, if the boss wasn't so possessed with the company share price, perhaps he should have focused more time in this issue. Now the word is TG is mistreating its foreign labor stuff.

Was the frenzy buying of TG shares worth it?

Math was easy. Add the money used in the buyback, the money stashed in dunno what money market fund, TG could have rewarded its shareholders with a very seductive dividend totalling more than 4 billion.

That alone is way too sexy. Which would have send the stock to the moon.

No need for any share buyback.

No questioning of his integrity.

This post has been edited by Boon3: Dec 11 2020, 12:49 PM

OMG.

ESG weighting on TP.

How come SPMX suffered worse than TG today?

maybe someone who gave the share buy back idea scare will get margin call if the share price keep failing?

Huh.... but isn't that even worst?

If that's the case what is he doing?
Using TG's money to defend his margin call?

But nah.... I don't think so.

Losses of SBB capital due to lowering share price is obvious

MSWG WEEKLY NEWSLETTER 04 DECEMBER 2020 (ENGLISH)
Friday, 4 December, 2020
04 December 2020

IS TOP GLOVE’S MASSIVE SHARE BUYBACK INTENDED FOR GREATER GOOD?

A simple calculation suggests that share buybacks may boost share prices by decreasing the number of outstanding shares in the market. Thus, the fewer outstanding shares means the remaining shareholders now own a larger piece of the pie.

However, share buybacks also reduce a company’s cash position. As such, the company’s coffer shrinks in tandem with the quantum of share buybacks.

Let’s examine Top Glove Corp Bhd’s share buyback exercise which has somehow become a daily routine.

This follows a retreat of glove stock prices in recent times with the advent of COVID-19 vaccine roll-outs, while a ‘production lockdown’ at company level due to widespread COVID-19 infection among its workforce has cast concerns over Top Glove’s profit outlook.

From September till 2 December, the world’s largest glove producer has spent RM1.28 billion on share buybacks*. This equals to about 68% of the group’s net profit of RM1.87 billion for its financial year ended 31 August 2020.

The amount spent on share buybacks has also surpassed its cash and cash balances at the end of FY2020 which amounted to RM1.21 billion. Additionally, Top Glove has RM1.67 billion worth of investment securities.

As of 2 December, Top Glove’s cumulative net outstanding treasury shares stands at 177.78 million, an equivalent of a 2.17% stake.

(*Article titled “Top Glove spent another RM70m to buy back own shares today” dated 2 December 2020, published on The Edge Markets)



Boon or bane?

Questions therefore abound if Top Glove’s share buyback has a collateral motive to support its share price, and if it is indeed the right market strategy or would it be counter-productive in the longer term.

Obviously, Top Glove’s management believes that the stock itself is undervalued.

But if the share buybacks were to prevent its share price from dropping lower, this may be a herculean task as the daily traded volume of the stock easily amounts to tens of million shares. There is no guarantee that after having forked out RM1 billion on share buybacks, Top Glove’s shares will not continue their downward momentum (if there is any).

As suggested by some market observers, it will probably be better if a company reports increasing profit and revenue every quarter while rewarding shareholders with better dividend payout, and thereby supporting its share price.

Top Glove may also invest the money it spent on share buyback to construct more plants to produce more gloves, to acquire state-of-the-art equipment or even to improve its production/marketing efficiency.

Likewise, if the RM1.28 billion were to be paid out as dividend, Top Glove’s shareholders would probably use the dividend received to buy more Top Glove shares as a token of support towards the company.

And if Top Glove wants to reserve its cash, it may consider a dividend reinvestment scheme that allows shareholders to elect to receive shares (at a discount to the market price) in lieu of the cash dividend.

However, investors must not assume that buyback represents the most efficient use of capital. They need to look deeper into the decision-making process to assess if the management is really making the best possible capital allocation decision for growing shareholder value over the long-term.

In essence, it is only fair to judge whether a share buyback is a good thing or otherwise on a case-by-case basis.

To Top Glove’s credit, the company is not borrowing external money to facilitate the exercise.

For now, we may give the benefit of the doubt to Top Glove’s Board and management who have a reputation and stellar track record of enhancing long-term shareholder value.


http://www.mswg.org.my/newsletters/mswg-we...er-2020-english