Cambodia Investment Review
Royal Group Phnom Penh Special Economic Zone Plc. (PPSP) has received approval for a $200,000 share buyback by the regulator after a similar plan in 2020 was never executed. The approval was granted following a shareholder’s meeting on April 27, 2023. The buyback, scheduled to occur between June 1, 2024, and August 31, 2024, aims to capitalize on the perceived undervaluation of PPSP shares. The stock price jumped 10% to 2,230 riels a share upon the announcement.
The Securities and Exchange Regulator of Cambodia (SERC) has authorized a maximum buyback amount of 817,800,000 riel ($200,000 approx.), equivalent to approximately 405,000 shares at the current share price of 2020 Riel per share. This buyback represents up to 10% of PPSP’s total paid-up capital and will be conducted through the Auction Trading Method (ATM) with RHB Securities (Cambodia) Plc. acting as the broker.
Buyback Is A Strategic Move To Bolster Shareholder Value
According to the company’s audited financial statement as of December 31, 2023, PPSP’s retained earnings stood at approximately $21.6 million, with cash in hand amounting to around $4.1 million. The company’s short-term debts due within the next three months total about $3.2 million. The company expects to generate positive cash flow internally for the current financial year, providing a solid basis for repaying its debts and funding the buyback.
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The decision to undertake a share buyback is seen as a strategic move by PPSP’s management to bolster shareholder value. Seng Chan Thoeun, CEO of Royal Group Securities, remarked, “PPSP’s strategic decision to initiate a share buyback not only underscores the company’s confidence in its prospects but also enhances shareholder value by signaling a commitment to deploy capital efficiently.”
“With share buyback, it is possible that earnings per share can be enhanced, further instilling investor confidence. This proactive step reaffirms PPSP’s dedication to maximizing shareholder returns and showcasing their effort to deliver tangible returns to investors,” he added.
A Nearly Four-Fold Increase In Annual Net Profits For 2023
PPSP has the option to retain the repurchased shares as treasury shares, which may be distributed as dividends to shareholders, partially retained and partially canceled, or disposed of in the market for profit. The company assures that all provided information is accurate and complete.
The recent approval follows a period of significant financial improvement for PPSP. The company reported a nearly four-fold increase in annual net profits for 2023, driven by strong revenue growth and recent investments by the Royal Group of Companies. For the year ending December 31, 2023, PPSP’s net profit reached $7.9 million, a substantial rise from the $2.1 million recorded in 2022.
This financial growth and strategic buyback plan reflect PPSP’s ongoing commitment to enhancing shareholder value and demonstrating the company’s solid financial health and future prospects.
