Twenty Thai firms likely to start share buybacks

Twenty listed companies in Thailand are expected to start share buyback programs soon. This follows a decline in their stock prices, which have dropped below their intrinsic values. Asia Plus Securities (ASPS) sees this as a positive sign for long-term investors interested in purchasing Thai shares. So far, 28 companies on the Stock Exchange of Thailand (SET) have already repurchased shares totaling over 29 billion baht. Larger companies, such as PTT Plc, have also introduced buyback programs. The SET100 index stocks have lost an average of 34% in value over the past year. Currently, 39 companies in this index have a price-to-book ratio below 1, indicating potential for value increases. To identify which companies might buy back shares, ASPS looked for firms with low valuations, substantial cash reserves, and positive cash flow. Twenty companies fit this profile, including Banpu Plc, Thai Oil, and SCG Packaging, among others. The chairman of SET, Kitipong Urapeepatanapong, has proposed changes to the Public Limited Companies Act. These changes would remove the current limit on buybacks, allowing unlimited repurchases and enabling companies to conduct buybacks without a waiting period. The aim is to improve company valuation and increase dividend distributions. Share repurchases are noted to influence stock prices favorably. When a company announces a buyback, prices often rise, with smaller buybacks leading to increases of 2-3% and larger ones pushing prices up by about 16%. The market tends to view these buybacks positively, suggesting that companies believe their stocks are undervalued. Buybacks not only boost stock demand but may also improve earnings per share (EPS) by reducing the number of tradable shares. This can enhance shareholder equity and confidence in a company’s future performance. Overall, ASPS advises that while buybacks can be beneficial for financial management, they should be considered with other important factors for investment decisions.