Following constant queries by shareholders on a share buy-back programme, the board of JMMB Group Limited (JMMBGL) has approved it for execution in its 2023 financial year which starts on April 1, 2022.
This comes amidst JMMBGL's stock price trading below the market and financial sector's average price to earnings (PE) and price to book ratio. At the company's annual general meeting (AGM) in September, it was stated that JMMBGL was trading at a 48 per cent discount on a PE basis to the Main Market for the past year.
As of Tuesday, JMMBGL's trailing twelve-month PE is 7.27 on a market price of $38.24 which is only up 10 per cent year to date.
A share buy-back involves a company buying back shares from the market and cancelling them after the transaction. This reduces the number of overall shares outstanding and makes the remaining shares more valuable as fewer are in issuance. A share buy-back is more tax effective than a dividend which tends to carry a withholding tax. Community & Workers of Jamaica Co-Operative Credit Union Limited just announced a share buy-back where it will purchase up to 10 per cent of its deferred shares. Kingston Properties and the Eppley Caribbean Property Fund – Value Fund are other companies which engaged buy-back programmes.
Though JMMBGL has confirmed the share buy-back, it hasn't provided details except that it will be an open market programme where they'll buy the shares directly from the market. At the group's first quarter briefing last month, Chief Investment Officer Damian Brown stated, “An EGM is not required for a share buy-back in terms of the proposal we're looking to put forward, but all the details regarding amounts, timing and structure of the buyback will be communicated once the board has duly had the time to review the management's recommendation.”
JMMBGL has benefited from its associate company Sagicor Financial Company Limited's (SFC) share buy-back programme in the last six months which has seen its stake increase from 22.73 per cent to 23.22 per cent. SFC renewed its normal course issuer bid in June which allows it to purchase 9,131,133 shares or 10 per cent of the public float for one year. JMMBGL's assets stood at $562.48 billion with $65.15 billion in cash and cash equivalents.