Thanh Thanh Cong - Bien Hoa Joint Stock Company (Market Identifier Code: SBT) has completed the buyback of treasury shares (TS) as announced previously.
From 18 April to 17 May, SBT successfully purchased 61,600,900 shares which equal to 11% of total trading shares. SBT spent a total amount of nearly VND1,100 billion to purchase TS at the average buying price of VND17,856 per share through matched order method.
Despite the unfavourable market conditions, the company completed the transaction of 74% of the pre-registered shares. The act is viewed as a big transaction on the stock market perennially when considering the treasury share value of 11% charter capital. SBT stock price has remained stable recently.
The buyback of TS is an important step in the efforts to protect the interests of investors and shareholders. The purchase limits stock dilution risks for existing shareholders, supports the increase of shareholder value in the future due to key influential factors below.
SBT simultaneously continues to expand high market segments (recognized as a qualified supplier by big brands such as Nestlé, Vinamilk, etc.), improves production efficiency, and develops domestic and export markets. Meanwhile, the company also promotes the development of new high value-added products such as European-standard organic sugar, dietary sugar, and natural brown sugar, etc. to meet the premium and diverse demands of different consumer groups. High value-added products partly improve profit margin in the core business.
Successfully taking advantage of post-merger merits, net income (NI) and profit after tax (PAT) witnessed an increase of 153% and 54% respectively in the first nine months of the fiscal year 2017-2018 compared to the respective numbers of last year. Total assets were $833 million, which is 240% as large as total assets in the beginning of this fiscal year. In addition, thanks to the positive cash flow improvement, the company has used spare cash for its profitable investment in the future.
The growth of sales and profit will accompany consolidated business foundation and the strategy of sustainable development. The company aims to achieve the consumption of more than 1.1 million tons of sugar, obtain a compounded annual growth rate of consumption up to 35% per year, and continue to increase market share as the leading player. The board of management ensured that the above goals can be achieved based on the solid basis after completing the value chain from production to customers, wide market coverage strategy, investment in depth, and consecutive researching and developing new products to serve diverse customers.
SBT is underpriced when P/E is 12.8. The ratio is significantly lower than the P/Es of leading manufacturers in consumer goods such as VNM (25.5) and MSN (29.0). Based on the leading position of the sugar industry, strong customer loyalty, and solid growing potential in the period 2018-2020, the value of SBT shares has not correctly reflected the real value of the company.
According to financial analyses in the first and second quarters, FPT Securities (FPTS) and Mirae Asset Securities (MASC) recommended buying SBT shares based on the assessment of growing potential and the long-term business strategy of the company. In the third quarter, most of the business and financial indices have improved and have contributed to the completion of 83% of annual planned NI and 72% of annual planned profit before tax.
SBT’s liquidity was relatively good, expressing through high trading volume and value matched of nearly 4 million shares and VND95 billion respectively per session. In the first half of May, some of the prestigious funds on the stock market were owning SBT shares in their portfolio, including VanEck Vectors Vietnam ETF (2.44%), FTSE Vietnam Index (1.22%), E1VFVN30 ETF 1.196%), FUESSV50 ETF (0.49%), and iShares MSCI Frontier 100 ETF (0.2%).