Malayan Flour Mills proposes share buy-back of up to 100.74m shares

TheEdge Mon, Apr 27, 2020 10:56am - 11 months ago

KUALA LUMPUR (April 27): Malayan Flour Mills Bhd (MFM) has proposed to repurchase up to 10% of its total issued shares or a maximum of 100.74 million units from 1.01 billion shares.

In a bourse filing today, the group said it will seek renewal of the authorisation from its shareholders for the share buy-back in the annual general meeting (AGM) on June 24.

“The price of the purchase of shares shall not be more than 15% above the weighted average market price of MFM shares for the five market days immediately preceding the date of purchase.

“The authority for the proposed share buy-back will be effective immediately upon the passing of the ordinary resolution in the forthcoming AGM for the proposed [exercise],” it said.

MFM said the proposed share buy-back will be funded internally through the company’s retained profit.

Based on the latest audited financial statements of MFM for the financial year ended Dec 31, 2019 (FY19), the group’s retained profit stood at approximately RM259 million.

It said the exercise is poised to benefit the company and its shareholders in several ways, including an increase in the group’s earnings per share.

MFM said the share buy-back may be able to stabilise the supply and demand of its shares on the open market and thereby support its fundamental value.

“If the purchased shares are kept as treasury shares, the directors may have an opportunity to sell the shares at a higher price and make an exceptional gain for the company.

“Alternatively, the purchased shares can be distributed as share dividends to shareholders or be transferred to employees under an employees’ share scheme and serve as a reward to the company’s shareholders or employees,” it added.

MFM’s net profit more than doubled to RM43.25 million for FY19 from RM17.78 million for FY18. Its revenue for the period grew 10.74% to RM2.68 billion from RM2.42 billion.

The flour miller’s share price rose 1.82% in early trade today, up 1.5 sen to 56.5 sen at press time with 2.4 million units changing hands. This valued the company at about RM569.18 million.

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