should ask the CEO why putting 61sen cash per share into cold storage. may as well distribute back to shareholders.

Is it for back up to save Genting if got problem.

RESORTS have been buying back their shares actively for the past few days. I'm holding 10 lots at 2.89 right now and I'm thinking of getting more. I don't think it will slide down further, and this is a good time for accumulating more around 2.80~2.90....Just my 2cents!!!

Ask CEO to distribute back the treasury shares back to you, so you do not have to buy more.

Use Resort money to average down instead yours.

This post has been edited by SKY 1809: Jun 20 2008, 05:36 PM

For the buy back, you know what something people doesn't notice is that those buyback programme are making shareholders losing money (on paper) at the moment.

For example, RR is buying back its shares constantly from the market since 3.50 or so. Now share price is only 2.80, so company had bought 'expensive' shares already and if those treasury shares being sold, company actually making a loss, (I knew it won't be sold as it is not the treasury share purposes, instead company will opt to write it off).
So it is much better company use the cash pile as a dividend and rewards the shareholders as cash.

If I attend AGM, I will ask this kind of question. If company need cash pile for future expansion, then fine, but I am the one against share buyback programme, it doesn't reward the shareholders very much. As those cash still being kept in the company, and shareholders don't benefit much from it. Still got lah, as EPS will be higher due to lesser outstanding shares, just dividend is much simple and rewarding.

Plus, buybacks mean the management is not concentrating on their business. Companies should not pay attention to their own shares, instead should work on operating efficiencies.

Time spent doing buybacks = time not spent to improve company's operations.

share buy back could be a sign that it could be turn private, first by using Resort's money, then only using Genting's money.

This post has been edited by SKY 1809: Jun 20 2008, 06:35 PM

thanks for reminding, Cherroy.
Will point this out if I do attend

Share buyback has nothing to do with privatisation as those shares are treasury shares which is belonged to the company itself, not substantial shareholders nor any shareholders.

Privatisation normally is substantial shareholders buy from the market and eventually take it private as getting 100% of the company shares(privatisation).

Thanks for everyone's opinion and below is the summary.

Summary of their shares buy back.
16-June-08 - Bought 2,790,000 shares at Min 2.91 and Max 2.93 and Total Paid RM 8,177,477.50.
17-June-08 - Bought 1,999,800 shares at Min 2.89 and Max 2.92 and Total Paid RM 5,822,431.00.
18-June-08 - Bought 3,109,700 shares at Min 2.85 and Max 2.87 and Total Paid RM 8,920,999.00.
19-June-08 - Bought 5,351,100 shares at Min 2.77 and Max 2.83 and Total Paid RM 15,008,297.00.
20-June-08 - Bought 3,080,900 shares at Min 2.80 and Max 2.82 and Total Paid RM 8,686,046.00.

Cherroy, it does reward shareholder. The share buyback if cancel the treasury shares means higher future dividend per share and higher earning per share

Furthermore, the share buyback can be use to do acquisition project...

Many benefit actually

1] Avoid hostile takeover

2] Preserve the company valuation


This post has been edited by keith_hjinhoh: Jun 20 2008, 07:31 PM

Not too sure whether the followings work:-

1) Resort share buy back ( up to 10% ) of its shares, so shares are actually retained within the same group using Resort cashflow.

2) At right time ( not now ) , when Genting if it is to take Reosrt to private, then it is much easier since less remaining shares in mkt to collect back ( 10% odeli held by Resort itself ) . Genting just has to buy back 10% in block from Resort World. Meanwhile or right now, Genting does not have to use its own cashflow.

I think it is workable, correct me if I am wrong .

This post has been edited by SKY 1809: Jun 20 2008, 08:08 PM

Share buyback was previously not allowable. However, after the 1997 crisis, the ministry actually permit it and stories goes on till today. It was meant to reduce the fluctuation of share price.

1] They're paying to other shareholder to buyback the share, so cash outflow.

2] There are some restriction towards the usage of the share buyback held in treasuries...

---

Added on June 20, 2008, 9:48 pm US is doing no good...

See how is monday news....

This post has been edited by keith_hjinhoh: Jun 20 2008, 09:48 PM

I knew, I was comparing with the usage of company cash pile to buyback or give as dividend. Both are good to be happening. Just comparing pros and cons.

If company uses the cash pile as dividend it would have better support (on share price) than buyback programme. As seen by those generous high dividend stocks, they hardly drop much, but buyback programme one can't fight the market force.

The more famous of disadvatange of buyback has happened lately. Banks in US prior before subprime meltdown are mostly implement buyback across. There is one bank buyback significantly when its share was around 50-60, but now only around 20. But company with recent turmoil and captial strapped, then decide to issue new share at 30 in order to raise fresh capital. Then those cash pile using on buyback is actually evaporating. If those cash pile instead of buyback, then give it as cash to shareholders, shareholders at least have those cash in hand, won't suffer the losses as much.

Mostly company in KLSE only kept the treasury share, mostly don't cancel it. A few sell it back to market after gaining.

For (1), it less likely happen in KLSE because mostly major shareholders already hold significant stake, free float share not more than 30-40%.

For (2), I assume the preserve company valuation mean supporting the share price, right?
But market already shows us, generous dividend stock share price is more well supported than those buyback one because of market force.

For the like R company buyback at 3.50, shareholders indrectly are buying at 3.50 also. Just like YTL related shares, they are buyback their own shares, eventually afterwards, distributed the treasury share back to the shareholders (free). Why need to make a big circle then, why not straight away give the cash as dividend? This really puzzling me. Don't get me wrong, it is good thing to happen also.

I don't understand the share buyback can be used to do acquisition project issue. Mind to share.

Don't get me wrong, buyback is also a good thing to happen.
Just I don't fancy company keep the cash forever in the company without rewarding shareholders much with only peanut dividend while company profit is hefty (not zero lah) if company find no usage of cash pile they have. If company need the cash for future expansion for further and future profit incremental then need to give peanut dividend, then I have no problem with it.
But if company generating huge profit then find no usage on cash pile generated years after years but reluctantly rewarding the shareholders, only go through buyback programme, but don't cancel the treasury shares hold, I don't see it is very fair to shareholders already.

This post has been edited by cherroy: Jun 20 2008, 10:03 PM

Selling pressure on Resorts World

KUALA LUMPUR: Resorts World Bhd remains as one of the most highly owned stock by foreigners but the escalating domestic political uncertainty and government policies will continue to spook foreign investors.

OSK Investment Research said these uncertainties were placing increasing pressure on stock price performance over the medium term.

Ina research note issued Friday, it said Resorts’ 2% decline in visitors arrivals in 1Q08 period served as a signal that operating conditions will continue to worsen, especially towards the 2H as inflationary pressures from fuel and electricity hikes set in.

“We have reduced our terminal growth rate to 3% from 4% per annum, leading us to reduce our fair value to RM2.85 and recommendation to Neutral,” it said.

OSK Research said selling pressure would likely to persist well into third quarter period.

“The probability of higher casino tax and the potentially steeper than expected drop in 2H08 earnings performance have yet to be reflected in consensus earnings estimates, which has remained largely unchanged post fuel price hike versus our 18% downgrade,” it said.

The research house said these factors, coupled with its existing high foreign shareholding level of 37%-38% placed a high degree of vulnerability on consensus earnings estimates and subsequently share price performance.

“Current implied share price valuations of 15.3 times FY08 price-to-earnings ratio (PER) relative to its historical trading range of 11x-21x indicates that the market has yet to fully priced in the abovementioned risk factors.

“On a separate note, management has been more aggressive of late in its share buyback activities, accumulating up to 10.4 million share over the past four trading days, representing roughly 8-10% of the total trading volume,” it said.

http://biz.thestar.com.my/news/story.asp?f...41&sec=business

This post has been edited by lowyat888: Jun 20 2008, 10:06 PM

1) cash already outflow as pointed out by keith_hjinhoh, as company need to pay for the shares purchased in the open market.

2) There are less shares in market so privatisation is much easier, quite correct. But Genting needs to use its cashflow to privatise Resort. Unless it is through reverse take over.

If the valuation is right, they will use the share they bought back previously in acquisition project.

When you see Share to share exchange, it's either means the company issue new shares or the shares comes from company treasuries....

It's efficient especially when the management deeemed it's cheap in term of valuation..

Eg: Turmoil happen. Company shares drop 50%, after turmoil, company valuation goes up by 50%, then they use the current market price as valuation for share to share exchange, eg: 10 YTL shares for 100 XYZ shares, this way, either party gains...

I think one of the factor to be considered is whether the company has sufficient Section 108 credit under the Income tax Act to frank the dividend payment.(This point will not be valid anymore if the company opt for the single tier system as announced last year.)

OK, I get it, that's on newly issue shares or use treasury share as collateral for acquiring cost.

It will be benefitting if those buyback shares are being acquired at low side.

On my given example on US banks side. Those buyback share are burning the company cash instead benefitting.

Haha...

If i'm management, i always see the shares currently traded at low side

That explain why...

Wow...!
when bad news comes, it comes in long streaks!
One by one companies get affected by our present political & economic situation.
This is just the tip of the iceberg.
Just not long ago, Resorts were valued @5.50, then reduced to $4.70, subsequently to $3.80,
but now @2.85!!!!! What next?