Evergrande Buys Back 374 Million Shares Worth 1.475 Billion HKD to Lift Investor Confidence

2015-07-09 13:35 2144

HONG KONG, July 9, 2015 /PRNewswire/ -- On July 8, Evergrande Real Estate (HK.3333) announced its decision to spend approximately 1.475 billion HKD in buying back about 374 million shares in the secondary market, accounting for 2.39% of its issued shares. This is another piece of good news for Evergrande, which increased the company's stock price by 3.19% to 3.88 HKD on that day against the general market downturn. An original report from Sina Leju follows.

There have been a lot of actions and good news for Evergrande recently, including the AAA rating given by three rating agencies, investment in the Hong Kong listed company together with Tencent, division of its football business, application for listing its cultural business on the New Three Board, June and half-year sales hitting a record high and coming close to Vanke, and successful issue of low-cost cyclic bonds of 20 billion HKD.  

According to insiders of the securities sector, after a listed company buys back its shares, its share price is likely to increase significantly. For example, Tencent bought back 153,000 shares with 76,730,000 HKD last April, and the share price increased by more than 12% in the following three days. Therefore, share buyback generally helps to support and stabilize the share price and push it upwards.

Due to the recent downturn in the domestic and overseas capital market, the value of Evergrande Real Estate is not fully reflected in its share price. With this buyback, Evergrande has taken a practical action to show its confidence in the company's development and growth potential, and to lift investor confidence. At present, Evergrande's PE ratio is only 3 or 4, which is far lower than that of its A-share counterparts, which have a PE ratio of more than 10. This shows a huge room for growth after the market recovers.

Source: Sina Leju
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