After announcing nearly, a year ago that it would be engaging in a $300-million open market share buy-back programme, JMMB Group Limited (JMMBGL) is yet to begin the programme which would reduce the number of outstanding ordinary shares in issuance.

The financial services conglomerate got approval from its board in November 2021 to start a share buy-back programme over one year which was to commence in the 2023 financial year (FY) which started on April 1. JMMBGL’s stock price spiked by 19 per cent to $52.86 on April 5, three days after the new FY began with the stock hitting an intra-day high of $61.24 which is still the 52-week high. However, the stock has retreated to $38.01 up to Tuesday with a 52-week low of $36.06 being hit on October 6.

“We got the board to sign off on our buy-back. We’re just awaiting approval that we need to get from Trinidad for the buy-back programme to start because what we have determined is that we have to support at technical levels. I know we’ve been talking about this, but we need regulatory approval in Trinidad. We’ve been trying to put it together and implement for the last year, but we have a last hurdle that we need to cross to get it done so we can provide support at those technical levels. It’s not a one off, but the TTSE [Trinidad and Tobago Stock Exchange] needs to sign off on that and then it will be in effect,” said JMMBGL Chief Executive Officer Keith Duncan at the company’s annual general meeting (AGM) held on September 21.

Companies listed on the TTSE are subject to the guidelines by the Trinidad and Tobago Securities and Exchange Commission (TTSEC) for share repurchases done under normal course issuer bids. The guidelines limit companies to only repurchase up to a maximum of three per cent of its shares over a three-year period if its public float is less than 30 per cent and not greater than 40 per cent. If the public float is greater than 50 per cent, the company can repurchase up to five per cent of its shares over two years.

JMMBGL has benefited from Sagicor Financial Company Limited’s share buy-back programme which has pushed up its initial stake of 22.50 per cent to 23.33 per cent up to June.

JMMBGL is listed on the Jamaica Stock Exchange (JSE) and TTSE with the former down four per cent year to date while the TTSE counterpart is down 16 per cent year to date (YTD) at TT$1.92. Duncan mentioned the fact that some investors do an inter-CSD (Central Securities Depository) transfer from the TTSE to the JSE in order to access foreign exchange (FX), especially the United States Dollar (USD) which impacts the JSE stock price. While it is a loss for investors transferring in this direction, it makes up for the lack of access to sufficient FX in the twin-island republic. The indicative buying rate by the Bank of Jamaica (BOJ) is $22.53 compared to the converted rate between both prices of $19.80.

GraceKennedy is the only recent cross-listed company to engage in a share buy-back between both markets. GK shareholders had originally passed a resolution in May 2006 to repurchase up to 2.5 per cent of its shares over three years, but no shares were repurchased over the period. GK executed another buy-back in October 2014 which was extended until the end of 2014. GK repurchased 4.12 million shares over the two years for a value of $245.46 million.

Guardian Holdings Limited ended its share buy-back programme after six months in August 2009 due to the daily share repurchase limit which the TTSEC didn’t renege on. It only purchased 75,861 shares for TT$1.53 million.

Some shareholders at the meeting queried why JMMBGL’s share price is underperforming and trading around the additional public offering price of $38/$38.75. JMMBGL’s trailing 12-month earnings per share of $5.95 gives it a price to earnings ratio of 6.39 times. The JSE Index was down nine per cent to 361,691.60 points for the first nine months of the year while the Junior Market Index was up 24 per cent to 4,229.54 points.

“I think what we’ve seen over the last year is the entire market sell off by 6.5 per cent and I think we’re up 1.5 per cent. Therefore, we are a Main Market company and not a Junior Market company. Junior Market companies are where you see a lot of excitement and enthusiasm around these listings. This is where I think a lot of market activity is focused in those areas and not necessarily on Main Market. If you look at our peers in the Main Market, not only in financial services, but manufacturing and other areas, the Main Market has not been delivering the performance of the Junior Market,” Duncan said in response to the shareholder query.

Eppley Caribbean Property Fund Limited – Value Fund (CPFV) announced in January 2020 that it would be engaging in a share buy-back based on the significant discount between the market price and its book value/net asset value (NAV). The programme originally listed 300,000 shares as the maximum number of shares to be repurchased but has expanded to 1.8 million with 1,590,484 shares purchased on the JSE up to October 14. CPFV is cross-listed on the JSE, TTSE and Barbados Stock Exchange.

FirstRock Real Estate Investments Limited has also began its own share buy-back programme as of September 1 with the company set to repurchase 3.83 million Jamaican dollar (JMD) shares and 24.78 million USD shares totalling 28.60 million share or 10 per cent of the ordinary shares in issue. The company has repurchased 500,000 JMD and 700,000 USD shares up to October 11.

“We promised to buy up to 15 per cent of the outstanding shares which is going to be in both J$ and US$ shares obviously. When you look at how many firms do buy-backs, they sit and buy back if the price drops below a certain level or they do drip, drip buy-backs. We’re not leading towards that type of structure and are considering a number of different angles. This would enhance the value for shareholders while providing the market with adequate liquidity. We’re going to look to use an approach whereby the buyback achieves both of those objectives,” said chief investment officer at Sygnus Capital Limited recently.

Sygnus Credit Investments Limited’s (SCI) J$ stock price is down 13 per cent YTD to $12.73 while its US$ share price is down 23 per cent YTD to US$0.0991. SCI’s articles provide for a share buyback programme to occur five years after its listing date where the aggregate value won’t repurchase more than 15 per cent of its NAV. SCI listed on June 18, 2018, with the company’s AGM to be held shortly to provide an update. SCI’s equity was US$60.88 million which means up to US$9.13 million that can be repurchased in the buy back.

“We have to look at our dividends per share. That is where for a Main Market stock, the dividend yield is important, but we have to balance that out with our cash flow. We fully intend that we need to work that through so that we can give a dividend yield that is attractive, but you have to balance capital, liquidity and manage all of that. Those are the areas I believe drive stock performance. We have to keep the market educated, informed and put buy-back programmes in place to support. Not to have major one-off buy -backs, but to provide technical support where we think the stock is a technical level. We have to look at how we reward our shareholders. Those are the areas that I would say that we need to continue to focus around so that we can deliver value to our shareholders,” Duncan closed.