16 September 2019 (closed)
USD/IDR (14,085) -14.00 -0.10%
EUR/IDR (15,570) +14.13 +0.09%
Jakarta Composite Index (6,219.44) -115.41 -1.82%
More than a dozen companies that are listed on the Indonesia Stock Exchange announced share buyback programs in 2018 in an effort to stabilize their share prices amid heavy volatile times. Indonesian publicly-listed companies that have announced their share buybacks include Nippon Indosari Corpindo, Bumi Serpong Damai and link Net.
Artha Sekuritas said a share buyback automatically leads to rising earnings per share (EPS) as the number of stocks that is available to the public declines. This then also allows room for rising dividend per share payouts. Thus the share becomes more attractive for investors (provided the company's corporate and financial management is sound) and should rise.
Whether the buyback programs will be completed successfully also depends on the offer of the involved companies. If they propose to buyback their shares at a premium to the current market price, then it becomes attractive for public shareholders to sell (part of) their shares.
Meanwhile, Indosurya Bersinar Sekuritas discerns three shares that are particularly attractive: (1) property developer Bumi Serpong Damai, (2) bread manufacturer Nippon Indosari Corpindo, and (3) telecommunication towers operator Sarana Menara Nusantara.
Bumi Serpong Damai is interesting because the company's performance has been improving since 2017, while the central bank has recently eased down payment regulations in the country's property sector (by relaxing the loan-to-value ratio). Meanwhile, Sarana Menara Nusantara is interesting because its performance is supported by long-term contracts in a market where there is a limited number of competitive suppliers (captive market). Lastly, Nippon Indosari Corpindo is interesting because the company has shown a good performance, while the company also proved its eagerness to innovate its bread products.
Listed Companies Planning Share Buyback in 2018:
Source: Bisnis Indonesia