"If you spend $1.22 on buying back a share. Yes, you "lose" the $1.22 from cash BUT you decrease the shares on issue by 1. The current market value being $1.22 means its a zero sum gain."
Zero sum game for the share price (if perfectly efficient pricing).
But market cap falls by the cash expended. It's similar to a capital return - the company is in a worse financial position after the buy-back.
But the expectation is:
Market cap falls from say $300m to $270m from a huge buy-back, but the company makes profits over the coming years, and say profit changes from $50m to $48m due to the $30m lost cash unable to be utilised. In the 2 scenarios:
$300m + $50m profit = 16.6% return for all holders.
$270m + $48m profit = 17.8% return for residual holders. So the buy-back was beneficial, as in this case there was little need for that excess cash (it only had a small negative impact on profit).
But in the case of KCN, there's significant utility from that cash - reducing expensive short term debt, or refurbishing/mining quicker. That makes a buy-back less attractive.
Same with the bonuses. We're missing out on the high utility from that missing cash - reducing expensive short term debt, or refurbishing/mining quicker.
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Last
$1.40 |
Change
0.045(3.32%) |
Mkt cap ! $360.8M |
Open | High | Low | Value | Volume |
$1.39 | $1.42 | $1.38 | $900.4K | 644.7K |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
1 | 8600 | $1.39 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$1.40 | 1313 | 1 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
1 | 8600 | 1.385 |
1 | 5000 | 1.375 |
2 | 17700 | 1.370 |
1 | 10800 | 1.365 |
1 | 12000 | 1.360 |
Price($) | Vol. | No. |
---|---|---|
1.400 | 1313 | 1 |
1.420 | 6189 | 2 |
1.425 | 8726 | 2 |
1.430 | 18845 | 3 |
1.435 | 3726 | 1 |
Last trade - 16.10pm 19/08/2024 (20 minute delay) ? |
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KCN (ASX) Chart |