Since its FY16 results announcement on May 19, GLP has been actively conducting company share buybacks in the open market. So far, the company has gone into the market on 14 occasions to purchase some 26.7m shares for S$48m, which translates to an average price of S$1.80 per share.

Given the group’s strong balance sheet with, on a pro-forma basis, US$2.0b cash with a look-through net debt to assets ratio of 24%, there is significant capital to deploy and we believe that these share buybacks are accretive to shareholders at currently undervalued share prices.

We continue to take a positive view on management team’s pragmatic and disciplined approach to capital allocation in current conditions, and continue to see longterm value in GLP’s shares. That said, we are cognizant of the increased scope for volatility ahead as the market continues to seek clarity regarding Chinese macro-economic risks. Maintain BUY with an unchanged fair value estimate of S$2.37.

Source: OCBC Research - 10 Jun 2016