(Aug 5): The Straits Trading, one of the oldest companies in Singapore, has been steadily buying back its own shares from the open market since last October. It made 10 purchases that month, followed by nine in November and 13 in December.
The most recent purchase was made on July 30, its 17th buyback in the month. On that day, the company bought back 10,000 shares at $2.32 each, spending a total of $23,247.54. Straits Trading’s current share buyback mandate, which gives the company the leeway to buy back up to 40.7 million shares, took effect on April 26 this year.
With the July 30 purchase, the company has bought a total of 512,400 shares so far under the current mandate. The company now holds a total of 930,000 treasury shares, and has a total issued share base of nearly 407.2 million shares.
While Straits Trading was buying back its shares, asset manager Franklin -Resources sold 71,900 shares in the company on July 22 at an average price of $2.33, trimming its stake from 6% to 5.98%.
Straits Trading’s share price has gone up by 12.25% year to date to close at $2.29 on July 31. At this level, the company has a market value of $932.4 million and is trading at a historical price-to-earnings ratio of 11.8 times.
The company’s core business was in tin mining, held via its separately listed subsidiary Malaysia Smelting Corp, which trades on the stock exchange in Malaysia. In recent years, its more significant moves have been in real estate.
For example, last September, Straits Trading said it was exploring options to unlock the value of 40.1 acres of prime land in Penang that it owned with its subsidiaries. The land is a 10-minute drive to the upcoming Penang Sentral, a multibillion ringgit transport hub connecting the railway, ferry and bus services in the state.
Most recently, on June 20, Straits Trading announced that it was expanding its logistics business by entering the South Korean market and developing a new facility in Australia. It has partnered IGIS Asset Management in South Korea to create modern logistics facilities focused on the Greater Seoul area, with an initial capital commitment of $127 million. In Australia, it is about to complete the acquisition of a land parcel for a 14,665 sq m purpose-built office and warehouse facility in Adelaide.
The company’s most recent earnings were announced on May 14. For the three months to March 31, Straits Trading reported a 78.1% y-o-y jump in earnings to $17.3 million. Revenue in the same period was $111 million, down 10.4% y-o-y. The company attributes the earnings growth to improved performance across all its business segments, especially the real estate business, largely thanks to better performance at real estate manager ARA Asset Management. Straits Trading holds a 21% stake in ARA Asset Management. For the quarter, earnings from real estate was $12.4 million, up from $8.8 million a year earlier.
