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4 Stocks This Week (Biggest Share Buyback) [27 March 2020] – DBS; OCBC; UOB; Gold Agri

Similar to individual investors, companies with strong cash flow and are confident of being able to ride out the COVID-19 challenges can buy shares at an undervalued price.


For the past two months, COVID-19 has been the main focus for both the investment community and the world at large. What started originally as a local virus has now become a global pandemic. The only question remains, how much worse can things be?

Obviously, the financial markets have not been spared. Investors are currently in the midst of one of the worst stock market crashes in history and both professional analysts and armchair critics are unsure about whether things will continue to get worse before they become better.

The truth is that nobody knows. Our world’s future is uncertain and very much dependent on how the war against COVID-19 pans out.

Some of Singapore’s most prominent companies have seen their stock price take a beating because of circumstances beyond their control. However, with uncertainties also come opportunities.

Share buyback is one way in which listed companies may choose to deploy capital if it believes its shares are undervalued, and that the repurchase of shares on the stock exchange would create positive value for its shareholders. Once shares are bought by the company, they can be converted into treasury shares, which means they are no longer categorised as shares outstanding.

The Singapore Exchange (SGX) reported that in March, 53 SGX primary-listed stocks bought back shares for a total of S$488 million. In this week’s edition of 4 Stocks This Week, we look at the most active companies doing share buyback.

* March 2020 Buyback. Figures are accurate as of 20 March 2020.

Read Also: Here Are The Worst Hit STI Stocks In 2020

DBS (SGX: D05)

Similar to most stocks on the exchange, Singapore’s biggest company by market capitalization saw its share price taking a beating as it has fallen from $26.11 from the start of the year to $19.14 as of 27 March. Price was at a 52-week low of $16.88 on 23 March.

DBS share buyback was made at an average price of $19.947, with the company spending a total of $368 million to buy back 18,450,000 shares for March. This is a sign that DBS is confident of being able to weather its COVID-19 challenges.

OCBC (SGX: O39)

After purchasing about 750,000 shares in January 2020 worth about $7.5 million, OCBC continues share buyback in March, paying an average of $9.158 for 2,100,000 shares worth a total of $192.2 million.

Last week, OCBC was upgraded by CGS-CIMB to “add” from “hold” with its shares now trading at a price-to-book (PB) value of 0.83. What this means is that the assets held by OCBC are currently worth more than the total value of the company. According to CGS-CIMB, the target price for OCBC is $9.04. The company is currently trading at $8.91.

UOB (SGX: U11)

Not to be outdone by its banking counterparts, UOB has also repurchased shares worth a total of $16.2 million for March. This is done at an average price of $20.498.

Since the start of the year, UOB has seen its share price drop from $26.68 to a low of $17.28. It’s currently trading at $20.21.

Read Also: Share Buybacks: What It Means And How It Impacts Investors

While most banks, inclusive of our three local banks, will naturally be affected by the slowdown in the global economy and the pessimistic outlook in the near-term, it’s worth noting also that the aggressive approach they are taking towards share buyback suggests that they are all confident of being able to ride out this difficult period.

For March, DBS has been the most aggressive, taking up about 36% of the shares they are currently authorised to purchase.

Source: SGX

Golden Agri-Resources (SGX: E5H)

Golden Agri-Resources is one of the largest oil palm plantation companies in the world.

The past year has not been too kind to Golden Agri. A year ago, it was trading at a price of $0.28. This has now fallen to $0.144, so shareholders would have lost about 50% of their investment over the past year.

Unlike the banks, Golden Agri share price has been on a gradual decline over the past five years and have also not performed well over the past 12 months, even before the COVID-19 pandemic took centre stage.

In March, Golden Agri spent about $8 million on share buybacks at an average price of $0.189 per share. It’s, however, trading at only $0.144 as of 27 March 2020.

To read up more about share buyback, you can refer to this SGX market update report.

Read Also: Why 2020 Could Be The Best Year To Start Your Investment Journey (Slowly)

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4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.