Blue-chip companies CapitaLand Investment (CLI) and Venture Corp have been stepping up their share buybacks in recent weeks. CLI, which has been making occasional buybacks, went on a buying spree after it warned early last month that earnings for FY2023 ended December 2023 will see a “significant decrease” over the preceding FY2022. CLI will report its FY2023 results on Feb 28.
On Jan 10 and 12, CLI acquired over one million shares and 2.54 million shares at $3 each respectively on the open market. The buying resumed a few days later on Jan 15 when it acquired 297,400 shares at between $3 and $3.01. The following day, CLI bought another 90,100 shares at $3.01 each.
The most recent purchase was on Jan 17, when it bought a whopping 10 million shares at between $2.96 and $2.99 each. This brings the total number of shares bought back under the current mandate to around 35.4 million shares, equivalent to 0.59% of the total share base. At about $3, CLI’s share price is at its lowest level in the past year.
According to CLI on Dec 8, persistently high interest rates and geopolitical tensions have resulted in “continuing challenges” for deal-making and fundraising. CLI says it faced operational pressures too, especially in markets ranging from China, Australia, Europe, the UK and the US, along with “potential significant valuation risks”.
CLI expects fair value losses on its portfolio of investment properties in FY2023, primarily attributable to the investment properties in the above-mentioned markets. “The fair value losses are however non-cash in nature and arose mainly due to higher capitalisation rates and weaker market sentiments,” the company says, adding that its core operating earnings have not been significantly impacted and operating cashflow remains stable.
In its most recent 1HFY2023 earnings, CLI reported revenues of $1.35 billion, down 1% y-o-y. Total patmi for the same period stood at $351 million, down 19% y-o-y from $433 million recorded for 1HFY2022.
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Lower earnings, more cash
Venture Corp has also been buying back shares as it deals with the current downturn of electronics and overall manufacturing. On Dec 15, Venture acquired 80,000 shares at $12.8 each on the open market. Later on Jan 11 and 16, Venture acquired 10,000 shares at $13.66 and $13.71 each respectively.
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Most recently on Jan 17, Venture acquired another 71,000 shares at $13.55 each, bringing the total bought under the current mandate to 671,000 shares or 0.2306% of the total share base. Besides the share buybacks, asset manager Ameriprise Financial has emerged as a substantial shareholder of Venture. On Nov 20, it acquired 300,000 shares at $12.89 each. This brings its total deemed interest to just over 14.7 million shares or a stake of 5.061%, from 4.958% previously.
Meanwhile, Schroders, another fund manager cum substantial shareholder, trimmed its stake in Venture. On Nov 22, Schroders sold 113,300 shares at $13.02 each. This left it with a deemed interest of around 17.41 million shares or a stake of 5.992%, down from 6.031%.
In its most recent 9MFY2023 ended September 2023 business update, Venture reported earnings of $203.3 million, down 25.2% y-o-y from $271.7 million recorded for 9MFY2022. Revenue stood at $2.29 billion, down 18.8% y-o-y.
The company’s net margin suffered slightly as well, going down from 9.6% in 9MFY2022 to 8.9% in 9MFY2023. Venture attributes the lower numbers to soft customer demand and ongoing inventory destocking, which happened at a high base in the preceding year.
As at Sept 30, 2023, Venture’s net cash position rose 36.5% y-o-y to $956.6 million. In its earnings commentary, Venture says that new product introductions with both existing and new customers are on track to be rolled out this year. “The Venture Group intends to expand our participation in new high-growth technology domains.”
