Investors have traded a cumulative 4.9 million shares of Centum Investment Company Plc worth Sh44.5 million since the firm opened its stock buyback programme on February 6.
The volumes of traded shares have more than tripled since the stock buyback started, indicating that the company is the major buyer of the units supplied in the open market.
Centum has a target of repurchasing 66.5 million shares over an 18-month period to August 8 next year in an exercise that could cost it up to Sh600.8 million.
The company has been undervalued on the Nairobi Securities Exchange (NSE) for years and the share buyback is expected to help close the valuation gap.
Centum reported a net asset value per share of Sh59.8 in the six months ended September 2022, indicating that it is undervalued by 85 percent based on yesterday’s closing price of Sh8.94.
The company has blamed its low share price on several factors including investors’ perception of high risk from its previous debt-fueled expansion, an issue it has been addressing by steadily repaying more loans.
Stock buybacks have the effect of raising the stakes and earnings for continuing shareholders.