SM’s board approved the creation of the buyback program, equivalent to about 6.4 percent of the conglomerate's P935 billion current market value, during their meeting on Friday.
“By announcing the largest share buyback program in the Philippines to date, [SM] is signaling its strong conviction that its shares are trading at a significant discount to fair value,” said Juan Paolo Colet, managing director of the Sy family-led China Bank Capital.
SM’s businesses include the country’s largest bank and biggest shopping mall group, which are closely tied to the Philippine consumer economy. However, market prices have struggled, reflecting weak sentiment on stocks.
Stock exchange data showed SM shares are down 16.8 percent since the start of the year and lower by about 21 percent over the past five years.
“It also shows optimism in our country’s economic prospects given the SM Group’s presence in many key domestic sectors and industries,” Colet said.
“They join a growing list of blue-chip companies that are undertaking significant share buybacks amidst depressed market prices,” he added.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
