WuXi Biologics set aside US$600 million to repurchase its shares from the market, according to an exchange filing on Wednesday. The biotech firm suffered a 30 per cent rout in the preceding two days, crashing its market value by US$7.2 billion and dragging the benchmark index to a 13-month low.
“The current trading price of the shares does not reflect their intrinsic value or the actual business prospects of the company,” WuXi Biologics said in its filing. The repurchase plan shows its confidence in its own business outlook and prospects, the firm added.
WuXi Biologics is not alone. Conglomerate Swire Pacific and Macau casino operator Sands China also benefited from signs of market-buying support. These moves mirrored Meituan’s attempt with its US$1 billion repurchase programme, days after its stock was pummelled by signs of slowdown in demand for its services.
The biotech firm, which tumbled 24 per cent on Monday after predicting a bleak business outlook, is valued at 27 times earnings, near a decade low, according to Bloomberg data. The multiples for Meituan and Swire Pacific are 22.9 times and 8.2 times, respectively, also close to decade-lows.
Hong Kong stock buy-backs nearing US$10 billion cannot halt market slide
Hong Kong stock buy-backs nearing US$10 billion cannot halt market slide
The Hang Seng Index fell this week to the lowest level since mid-November last year, having lost nearly one-tenth of its value from November 15, amid slowdown risks. More than US$628 billion has been erased from the city’s stock market this year, while the Hang Seng Index headed for an precedented fourth year of decline.
China’s exports likely stalled in November, after shrinking in the preceding six months, while consumer and producer prices both contracted, economists forecast before official reports this week. Moody’s cut China’s rating outlook to negative from stable on Tuesday.
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China is also a key market for Swire Pacific, whose shares had tumbled 26 per cent this year to a one-year low, before the repurchase announcement. The property to aviation and beverages group hired brokers on Tuesday as it unveiled a HK$6 billion (US$767 million) stock buy-back programme.
Buy-backs in the present conditions will show the company’s confidence in its business outlook and prospects and would create value to its shareholders, Swire said in its filing.
Sands China also received a boost, albeit from its parent company. Las Vegas Sands, which controls about 70 per cent of the Macau casino concessionaire, has set aside as much as HK$1.95 billion (US$249 million) to raise its stake in the unit. The sum could buy an extra 1.2 per cent stake at current market price, it estimated.