bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

helpersCheckIsPostiesArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

moreOnThisArticles

urlAlias

commentCount

authorLocations

authors

paywallTypes

corrections

sponsorType

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

socialHeadline

headline

flag

firstTopic

glossary

flattenTypeIds

publishedDate

additionalInfoBoxes

images

image

relatedLinks

relatedNewsletters

__typename

createdDate

sponsor

factSheets

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

copyrighted

customTimezone

liveContents

SCMP Reporter

FALLING share prices have sent companies on a share buy-back binge, with many spending hundreds of millions of dollars in cancelling shares.

  Companies including Wheelock and Co, Chinese Estates Holdings, Great Wall Electronic International and a host of second-line issues have bought back their own shares nearly 200 times since the start of last month.

   The rate of buy-backs shot up as the market fell.

  ''According to our market surveillance division, there were 106 buy-backs in the first quarter of 1993 and 116 in the first quarter of 1994,'' said Hubert Chan Wing-yuen, assistant director of the stock exchange.

  But since last month the number of buy-backs rocketed as share prices slumped.

   ''There were 282 buy-backs in the year to May 19 compared with 378 in the whole of last year,'' said Mr Chan.

  Companies have continued to be customers of their own shares since May 19, with a further 13 buy-backs, meaning that from April to May 23, 179 individual repurchases have taken place.

    Wheelock has been into the market 25 times, while Chinese Estates has bought 20 times. Great Wall has been in the market more than a dozen times, and so has ONFEM Holdings.

  Wheelock has bought back more than 12 million shares on the market at prices ranging from $15.90 on the last day of March, when the buy-back spree began, to $19.40 on May 20.

  The company spent between $17 million and $18 million on May 13 when it bought 964,000 shares.

   Wheelock has spent close to $200 million, or about a fifth of its profits for the six months to September 30 last year.

  A company spokesman said the buy-back involved only a little money.

 ''We had some spare cash and the shares represented good value,'' he said.

   He said it was ''not fair'' to compare the amount spent on share buy-backs with profits, but the figure used should be considered as total working capital, which he was ''not at liberty to divulge''.

  In the first six months of this financial year, Wheelock spent $204.34 million buying shares.

  The Wheelock spokesman said the company would continue to buy its shares back if they were good value.

  He also said Wheelock liked to maintain liquidity in the market to buy back its shares.

   Great Wall has been buying back its shares since it was given a mandate to do so by shareholders.

   It bought back more than 14 million shares up until March 18, which could have cost it up to $20 million.

   Since then it has bought back a further 12 million shares.

  The company's issue of 150 million shares in July last year raised $210 million. The issue was priced at $1.58 and the last buy-back, on May 23, saw the company take back 1.28 million shares at between 91 and 93 cents - a profit of at least $830,000.

      Chinese Estates has bought back 25 million shares from the end of March. This means that only four per cent of shares are in public hands.

   This will have cost up to $175 million, or almost a third of the company's profit last year.

  But the Chinese Estates buy-back is still only a fraction of the size of the operation it undertook last year, when it spent $930 million on taking shares out of the market.

   Share buy-backs automatically lead to the cancellation of the shares in Hong Kong.

  There are a number of effects of cancellation.

  The more shares retired, the higher the earnings per share and the rise of net asset value per share.

     Buy-backs also increase majority shareholders' control and can help support prices in thinly traded markets.



Firms on share buy-back spree