Friday, October 23, 2009 | MANILA, PHILIPPINES [ BusinessWorld Online ]
GOKONGWEI-LED Robinsons Land Corp. has joined other companies buying back shares from the open market to enhance their value.
In a disclosure, the property firm said it would soon implement a share buyback program involving up to P1 billion worth of Robinsons Land’s common shares.
The shares represent approximately 3.1% of the firm’s current market capitalization, which as of yesterday stood at P32.27 billion.
"The objectives of the share buyback program are to enhance shareholder value and to manifest confidence in the company’s value and prospects through the repurchase of the common shares," Robinsons Land said.
Earlier this year, listed online gaming company Prime Gaming Philippines Corp. engaged in a similar scheme.
A firm usually undergoes a share buyback program if it thinks its shares are undervalued, sending a signal to the market that it can still generate cash.
A company also buys back shares to prevent share price erosion, although it runs the risk of reducing stock liquidity since a buyback program makes it harder for the stock to climb due to minimal trading.
Last year, share prices were hit by negative market sentiment brought about by the US-led economic slowdown. The bourse’s main index lost almost half of its value, ending 2008 at 1,872.85.
The Philippine Stock Exchange index has so far managed to redeem more than half of its value, closing at 2,888.72 yesterday.
Last year, a number of companies started buyback program, including Alliance Global Group, Inc. and property arm Megaworld Corp., Alaska Milk Corp., Ayala Land, Inc., Pacific Online Systems Corp., the Philippine National Oil Co.-Energy Development Corp., and Splash Corp.
Shares in Robinsons Land did not move at P11.75 apiece yesterday. — K. J. R. Liu
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