"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
$1.54 |
Change
-0.005(0.32%) |
Mkt cap ! $396.9M |
Open | High | Low | Value | Volume |
$1.55 | $1.58 | $1.53 | $1.024M | 661.5K |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
1 | 21000 | $1.53 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$1.55 | 6269 | 1 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
1 | 21000 | 1.530 |
1 | 3762 | 1.525 |
4 | 26762 | 1.520 |
1 | 7000 | 1.505 |
5 | 53850 | 1.500 |
Price($) | Vol. | No. |
---|---|---|
1.545 | 6269 | 1 |
1.550 | 17400 | 4 |
1.555 | 3762 | 1 |
1.560 | 3762 | 1 |
1.575 | 24500 | 2 |
Last trade - 16.10pm 28/10/2024 (20 minute delay) ? |
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KCN (ASX) Chart |