Buy-backs logically lower the market cap by the amount of cash expended (as the company ends up in a worse financial position - lower cash balance in the short term, but future earnings can be divided by fewer shares). It could temporarily push the market cap up due to the higher buying pressure though.
So potentially neutral impact on market cap overall, so a minimal impact on ASX200 status.
A higher SP does not mean a higher market cap, if you reduce shares on issue.
200m shares on issue, $5 SP = $1b 180m shares on issue, $5.5 SP = $1b Big assumption being: expending $100m of company money instead of re-investing it, did not result in any reduction in earnings. Otherwise the 180m shares case would likely have lower market cap due to that fact. So: 180m shares on issue, $5 SP = $0.9b (after paying out $100m of company cash as buy-backs)
So buy-backs make sense when you have nothing useful to re-invest the funds into - no easy way to grow earnings (eg. instead of wasting money on Challenger, or if no further licenses were approved to expand Chatree).
KCN Price at posting:
$1.22 Sentiment: Buy Disclosure: Held
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