Posts: 190
Threads: 10
Joined: Jan 2011
Reputation:
2
Company buying up own shares is mostly good news for shareholders. GMG didn't just sell 3 billion shares. They created new shares and sold them off, increasing capitalisation of the coy, reducing its share price and reducing its NTA. However, the share price has decreased disproportionately. Now the company sees value in its own shares where the share price is at or slightly below NTA. I suspect that there may be support now for the share price. Provided no big shocks occur, the share price should stabilise here and hopefully move up henceforth.
Posts: 2,113
Threads: 19
Joined: Dec 2010
Reputation:
5
the share ssold @0.091 by GMG and the shares bought back @0.113 by GMG are the same share. No matter how you would like to look at it, it is stupid thing to do.
to the extreme, if you prefer the company continuing to buyback its own shares @0.113, soon, you will find your share is worth less and less.
Posts: 190
Threads: 10
Joined: Jan 2011
Reputation:
2
I do not think that they are doing anything stupid. Remember that if one bought the shares at 0.23 around the time of the announcement of the rights issue, the corrected price would have been about 0.16. It's now selling at around 0.11. NTA per share prior to and after the rights issue was 11.76 cents
and 10.37 cents, respectively. Current share price is closer than ever to its NTA. Of course, in deciding about whether to take the risk of buying their shares, this cannot be the only consideration. There are many other variables that could impact on the price of the share- rubber prices, weather, political situation in the African countries, debt crisis in Europe, hard landing for China, US economy, etc, etc. These are wild cards that impact on the market as a whole, I suppose.
Posts: 3,936
Threads: 87
Joined: Aug 2011
Reputation:
78
(27-12-2011, 06:24 PM)freedom Wrote: did I see it wrong?
today GMG bought back 13.2 million share from open market @0.113. I thought they just sold more than 3 billion of their share @0.091.
what a ridiculous way of managing money.
If GMG uses these shares as treasury shares for its employee share option programme, then maybe it still make some sense?
This reminds me of a chinese proverb: 'It is hard to get wealthy, but it is harder to maintain it'
Posts: 2,113
Threads: 19
Joined: Dec 2010
Reputation:
5
29-12-2011, 07:17 AM
(This post was last modified: 29-12-2011, 07:27 AM by freedom.)
(29-12-2011, 12:10 AM)VestedInterest Wrote: I do not think that they are doing anything stupid. Remember that if one bought the shares at 0.23 around the time of the announcement of the rights issue, the corrected price would have been about 0.16. It's now selling at around 0.11. NTA per share prior to and after the rights issue was 11.76 cents
and 10.37 cents, respectively. Current share price is closer than ever to its NTA. Of course, in deciding about whether to take the risk of buying their shares, this cannot be the only consideration. There are many other variables that could impact on the price of the share- rubber prices, weather, political situation in the African countries, debt crisis in Europe, hard landing for China, US economy, etc, etc. These are wild cards that impact on the market as a whole, I suppose.
yes, its share price was 23 cents, but did GMG the company itself ever sold any of its share @23 cents? Why care about market price? GMG will never benefit from its high market share price if it can't sell its share @market price. But when it buys, it buys at market price.
as what I said earlier, if the company continues to buy back @0.113, soon, your share will be worthless sooner or later.
(29-12-2011, 12:37 AM)weijian Wrote: (27-12-2011, 06:24 PM)freedom Wrote: did I see it wrong?
today GMG bought back 13.2 million share from open market @0.113. I thought they just sold more than 3 billion of their share @0.091.
what a ridiculous way of managing money.
If GMG uses these shares as treasury shares for its employee share option programme, then maybe it still make some sense?
This reminds me of a chinese proverb: 'It is hard to get wealthy, but it is harder to maintain it'
it does not matter how the company will do with the share it bought back. If it is going to buy back at higher price, it should never issue them at cheaper price in the first place. Will you ever sell your own product cheap then buy it back higher later no matter what are you going to do with it? that does not make sense at all.
Posts: 3,936
Threads: 87
Joined: Aug 2011
Reputation:
78
(29-12-2011, 07:17 AM)freedom Wrote: it does not matter how the company will do with the share it bought back. If it is going to buy back at higher price, it should never issue them at cheaper price in the first place. Will you ever sell your own product cheap then buy it back higher later no matter what are you going to do with it? that does not make sense at all.
Logically, i can sell my PC at 100sgd and buy it back at 120sgd, provided i know i can give the PC to my brother, whom i own 120sgd, to cancel out the debt....haha 
But i do agree with you that in general, it is not an efficient way of using precious $...
Posts: 2,113
Threads: 19
Joined: Dec 2010
Reputation:
5
what makes it worse, is that, they just raised money from cheap rights...
it is really unbelievable.
if they do it in a year, maybe people will forget they have raised money earlier @cheaper price. But now? can there be a worse time?
Posts: 190
Threads: 10
Joined: Jan 2011
Reputation:
2
Great time to raise funds as there will be distressed assets out there for the picking. GMG has been sitting at the top of the top volume list in the past 2 days and has just been upgraded by DBS albeit merely from fully valued to hold. It's a small step but in the right direction. There are dark clouds in the horizon though. Need to be brave and patient with this stock.
Posts: 4,958
Threads: 1,349
Joined: Sep 2010
Reputation:
36
(05-01-2012, 11:46 PM)VestedInterest Wrote: Great time to raise funds as there will be distressed assets out there for the picking. GMG has been sitting at the top of the top volume list in the past 2 days and has just been upgraded by DBS albeit merely from fully valued to hold. It's a small step but in the right direction. There are dark clouds in the horizon though. Need to be brave and patient with this stock.
It would be interesting to see how the business of the Company is doing. High volumes of trade and recurrent churn does not really tell an investor about the quality of the Company, only that its shares change hands pretty often! No harm waiting for the next report and assessing the numbers, as well as going through all the facts and figures with a fine-toothed comb.
Granted, it's not going to be easy, but who said investing was? 
Posts: 190
Threads: 10
Joined: Jan 2011
Reputation:
2
Yes, totally agree that volumes don't say much about the actual numbers and business of the company. Moreover, volumes tend to favour penny stocks. The point is that the company has garnered some interest. And it closed mostly at a higher price. And that at least some are seeing the value of this company. Of course, it goes without saying that one must look at the usual parameters, investment climate, business prospects, financial ratios and other fundamentals. I will surely be looking forward to its next report. In conclusion, I don't think this company and its managers should be written off.....at least not yet.
|
Homepage
PR Newswire
