Companies on treasury stock buyback to mitigate COVID-19 impacts

Businesses are buying back treasury shares to shore up their ailing tickers

PAN Group has just approved a plan to buy back 21.6 million of its treasury stocks. Hodeco (HSX: HDC), Dat Phuong (HSX: DPG), and PVI Holdings (HNX: PVI) are also planning to take back millions of stocks. Also, Cuong Thuan Idico (HSX: CTI) and food company Sao Ta (HSX: FMC) decided to repurchase15.7 million and two million treasury stocks, respectively.

Moreover, VRC Real Estate and Investment JSC (HSX: VRC) also polled shareholders and decided to buy up to 20 per cent of its total outstanding shares.

TP Bank (HSX: TPB) was the first bank to announce getting 10 million stocks, with the expected trading timeline of March 20-April 18. Meanwhile, An Duong Thao Dien (HSX: HAR) bought 2.1 out of the 5.1 million stocks it released to the market.

Businesses are taking back treasury shares to shore up plunging stock prices. The acquisition is aimed to raise value for shareholders and stabilise stock prices. For a long time, treasury stocks have been used to avoid being controlled by investors registering to buy a tremendous load of stocks when prices were heavily down.

Buying treasury stocks and lowering the number of outstanding stocks also help companies increase profit per share performance, inflating prospects in their annual business results.

Most of these companies have seen their tickers fly low since the epidemic. For instance, VRC is down 70 per cent since early 2020. PAN also dropped by 20 per cent to VND17,000 (74 US cents) per stock. Based on the price, PAN Group may spend VND370 billion ($16.1 million) on buying back the 21.6 million treasury stocks they want.

HDC also declined by 35 per cent within three months while DPG fell by 37 per cent since early 2020.