First Philippine Holdings Corp. (FPH) has earmarked an additional P5 billion for an ongoing stock buyback program that would run until July 2020.
In a disclosure to the Philippine Stock Exchange on Thursday, FPH said the program was “intended to strike a balance between enhancing the company’s capital structure and maintaining the ability to fund future growth and investments.”
“Buyback transactions will be triggered if the company stock is substantially undervalued, when there is high volatility in share prices or in any instance where a buyback should serve to improve shareholder value,” it added.
The additional P5 billion stock buyback has been approved by FPH’s executive committee, augmenting an interim additional allotment of P750 million for the program that was made in June.
To date, FPH has repurchased from the open market about P6.75 billion worth of shares.
Once bought back from the market, the shares revert to the company’s treasury. Shareholder value is improved especially since dividends will be paid out to fewer shares that are outstanding. These shares can then be placed out in the future once market valuations are more palatable.
“FPH will also be mindful of the need to maintain the liquidity of its stock in the market,” the company said.
The company saw an 87-percent year-on-year increase in net income attributable to equity holders of the parent amounting to P3.76 billion in the first quarter of this year.
Shares of FPH gained by 2.5 percent to P88.15 per share following the disclosure on the additional stock buyback budget on Thursday, giving it a market capitalization of P43.8 billion. —DORIS DUMLAO-ABADILLA