Watch those treasury shares

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EMETERIO SD. PEREZ

EMETERIO SD. PEREZ

IF Universal Robina Corp. (URC) made a good profit from the sale of its treasury shares to a subsidiary of its own unit in Australia, what will stop the other listed companies either owned or controlled by JG Summit Holdings Inc. from reissuing their own shares that they had bought back?

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It is up to the public to speculate on the answers. After all, some if not many of them trade on the shares of URC, Robinsons Land, and Cebu Air.

Incidentally, JG Summit is not included in this piece because it has no treasury shares although it reported “40.99 percent” as its “free-float level.” The huge percentage attributed to the public, which is posted on the website of the Philippine Stock Exchange, should make it more public than others.

Food company
Universal Robina reported gross revenues of P109.051 billion in 2015; P92.376 billion in 2014; and P80.995 billion in 2013. From these revenues, it posted net income of P12.505 billion, P11.655 billion, and P10.117 billion in the last three financial years ending September 30.

In turn, these net profits gave URC stockholders earning per share (EPS) of P5.68 in 2015; P5.30 in 2014; and P4.60 in 2013.

Said EPS was computed on 2,181,501,933 outstanding common shares, which increased to 2,204,161,868 following the acquisition of 22,659,935 treasury shares by a URC foreign subsidiary.

As early as Sept. 30, 2012, URC had 46.137 million treasury shares, which cost it P670.386 million in buying them back in the open market. This translates to an average acquisition price of P14.53 per share.

JG Summit Holdings (JGS), the listed holding company of the Gokongweis, owns 1.215 billion URC shares, or 55.71 percent.

Foreign subsidiary
Universal Robina showed how profitable treasury shares can be if sold at the right time.

On Sept. 30, URC grossed P4.384 billion from the sale of 22,659,935 treasury shares at P193.45 each to Consolidated Snacks Pty Ltd. of Australia.

Before the sale, URC made sure that the buyer also belongs to the Gokongwei-controlled group. To be able to do this, it tapped URC International Company Ltd., a subsidiary, to buy Consolidated.

A filing showed the Gokongweis paid A$600 million in buying out Toccata Securities Pty Ltd. and Hopkins Securities Pty Ltd.

From its acquisition cost of P14.53 per share to its sale price of P193.45 each, URC made a gross profit of P178.92 per share and still owns 23,477,065 treasury shares.

Incidentally, Consolidated Snacks, which paid more than P4 billion for URC’s treasury shares reported “total deficiency” of A$154.472 million as of June 30, 2015.

Property unit
Like URC, Robinsons Land Corp. (RLC) is also a JGS subsidiary. A financial filing showed it has capital stock of 4.112 billion shares with par value of P1 per share.

In issuing shares, it grossed additional paid-in capital (APIC) of P20.393 billion, an amount that represents total premium over par value. Theoretically, this simply means RLC placed a premium of P4.96 each of 4.112 billion outstanding shares. (P20,392,532,781 divided by 4,111,528,685 outstanding shares equals P4.96 each).

A public ownership report as of June 30 listed JG Summit as the majority stockholder with 2.496 billion RLC shares, or 60.97 percent of 4.094 billion outstanding shares.

As in other listed companies, RLC’s outstanding shares exclude 17.698 million treasury shares, which cost Robinsons Land P221,834,657 in buying back. The reacquisition cost translates to an average of P12.53 per share.

Robinsons Land shares were last traded on September 30 at P31 each, giving it a paper profit of P18.47 per share for a total of P326.882 million.

Airline unit
Cebu Air Inc. has issued 613,236,550 shares. By deducting 605,953,330 outstanding shares from issued shares, the result would be 7,283,220 treasury shares.

The airline unit of JG Summit said it spent P529.319 million in buying back shares at an average price of P72.68 each in the open market. On September 30, Cebu Air shares closed the session at P113, making the airline company ahead by P40.32 per share, for total paper gain of P293.659 million.

CPAir Holdings Inc. is the parent company of Cebu Air. It holds 400.817 million shares, or 66.15 percent of 605.953 million outstanding shares. JG Summit owns 6.595 million shares, or 1.09 percent.

Together, CPAir and JG Summit own 407.412 million Cebu Air shares, or 67.24 percent leaving the public with 198.541 million Cebu Air shares, or 32.77 percent. (67.24 percent plus 32.77 percent = 100.01 percent. The excess resulted from the rounding of numbers in the computation.)

esdperez@gmail.com

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