MEGAWIDE Construction Corp. is increasing the value of its share buyback program to P5 billion and is switching the duration for the execution to be open-ended.
In a disclosure to the stock exchange Wednesday, the diversified engineering company said its board of directors approved earlier this week adding P3 billion to its share buyback program.
The period within which to execute the buying of shares has also been removed to make it open-ended.
Megawide did not explain the reason for increasing the size of the program, but it said in 2018 that it was doing the buyback because its shares are “grossly undervalued.”
The company started buying back P2 billion worth of its shares from the stock market in October 2018, originally scheduled to be executed within a two-year period.
Edgar B. Saavedra, chairman and chief executive officer of Megawide, said at the time that the program is proof of the company’s confidence in its long-term growth prospects. The buying back of shares was seen as a means to enhance shareholder value.
On Wednesday, shares in Megawide dropped 36 centavos or 2.88% to P12.14 apiece. It has been trading between P12.02 and P15.48 over the past 30 days.
Aside from Megawide, Metro Pacific Investments Corp. (MPIC) and Ayala Land, Inc. (ALI) announced last month that their board of directors also approved doing share buyback programs.
For MPIC, the approval was for the conduct of a three-month share buyback program of up to P5 billion until May 26. Like Megawide, it said the program would “enhance and improve shareholder value and to manifest confidence in the company’s value and prospects through the repurchase of its common shares.”
In the case of ALI, its board approved adding P25 billion to its current share buyback program, effectively increasing its available balance to P26.1 billion. The shares will be bought through open market purchases at the stock exchange.
The buying of a company’s own shares from the stock market is commonly done to preserve its share price when it thinks its shares are undervalued.
Shares in MPIC shed 14 centavos or 4.24% to P3.44 each on Wednesday, while shares in ALI added P1.15 or 2.90% to P40.75 each. — Denise A. Valdez
