Coal miner Geo Energy, perceiving its shares as undervalued, has commenced a share buy back programme.
On Dec 15, the company spent a total of $728,211 to buy back 2.3 million shares at between 31.5 and 32 cents each.
The volume transacted represents 21.6% of total trading volume this day.
The company says it will buy back the shares in a “controlled” and “orderly” manner over a “reasonable” period of time to “minimise undue movement” of the share price.
Geo Energy has an existing buyback mandate given by shareholders at its EGM held on April 28.
“Together with our dividend policy of at least 30% returns to our shareholders based on our earnings, subject to any capital requirements, embarking on a share buyback would increase value for our shareholders and strengthen our return on equity,” says Tung Kum Hon, Geo Energy’s CEO.
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He adds that as at Dec 12, the company’s cash balance was US$164 million. That’s after having recently paid an interim dividend of 3 cents per share, or some US$31 million worth, as well as prepaying US$63 million to its bond holders.
Tung adds that the coal market remains buoyant because of higher demand from China.
On Dec 8, the company announced that valuers have accorded a valuation of US$726 million for its mines.
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Geo Energy, based on Dec 15 closing price of 32 cents, has a market value of $454 million.
The company has earlier guided that it will report its “highest quarterly results” ever for 4QFY2021 ending Dec 2021.
