Lucky Cement, HBL sponsor announce shares buyback

KARACHI: A sponsor of Habib Bank Limited (HBL) and Lucky Cement Company Limited have announced a shares buyback, which resulted in the companies’ closing in the upper cap on Tuesday.

The market also celebrated the announcements.

According to a notification to the Pakistan Stock Exchange, Aga Khan Fund for Economic Development (AKFED) has informed Habib Bank Limited vide its letter dated May 1, 2023, of its intention to acquire additional shares of HBL from the open market, by utilising the accumulated dividends that have not been repatriated, amounting to Rs3.543 billion.

On the other hand, Lucky Cement notified that its board of directors has approved the buyback of up to 23.800 million issued ordinary shares of the company (constituting approximately 7.59 percent of the current issued and paid up share capital of the company), of the face value of Rs10 each.

The shares would be purchased from time to time at the spot/current share price acceptable to the company prevailing during the purchase period of June 2, 2023 to November 20, 2023.

Commenting on HBL’s sponsor buyback, one analyst at Topline Securities said, “The move comes as State Bank of Pakistan (SBP) does not allow repatriation of dividends due to low level of foreign exchange reserves, we think. However, the regulator allows funds to be used within Pakistan to avoid a net outflow of USD.”

He said, on the other hand, Lucky Cement is the first company to announce its second buyback (Treasury Stock) at PSX. Based on current prices, it translates into Rs10 billion buyback. To recall, Lucky Cement completed its first buyback of 10 million shares at an average price of Rs435.6/share in March 2023.

A representative of Lucky Cement said that following the successful completion of the company’s first buy-back of 10.0 million shares, the company announced yet another buy-back of 23.8 million of its own shares.

This buy-back plan is subject to obtaining the necessary approval from the members of the company. “The primary objective behind this strategic move is to bolster the company's valuations,” said the representative.

“By repurchasing its own shares, the company aims to optimise its capital structure and unlock additional value for its stakeholders.”

This buy-back initiative showcases the company’s proactive approach to managing its financial resources, fostering investor confidence and reinforcing its commitment to maximising long-term shareholder value. The company has announced to hold an extraordinary general meeting of its members on May 24, 2023.