TUE. 13 DEC, 2022-theGBJournal| On 20, November 2022, the management of Dangote Cement called an Extraordinary General Meeting (EGM) to be held today, 13 December, to pass a special resolution to undertake another share buy-back program in 2023.
Coronation Research, in a recent report,- Dangote Cement: The African Colossus, 11 April 2022, explained that on 21 January 2020, the shareholders of Dangote Cement had unanimously endorsed the company’s first share buy-back plan as part of the organisation’s efforts to enhance shareholder value.
The plan was to buy back 10% of its 17.04bn fully paid-up ordinary shares of 50k each. The buybacks were completed in tranches.
On 21 December 2020, the first tranche, ‘Tranche I’ of the share buy-back programme, was announced. The programme commenced on 30 December 2020 and was completed on 31 December.
Dangote Cement shares gained 9.98% on the day of the announcement of the Tranche I from N209.5/s to N230.4/s and, by the completion date, the stock was up 16.9% to N244.9/s. Management later undertook to carry out another tranche.
On 12 January 2022, the second tranche, ‘Tranche II’, of the share buyback programme was announced. The programme commenced on 19 January 2022 and was completed on 20 January.
Dangote Cement shares gained 6.18% on the day of the announcement of the Tranche II from N259/s to N275/s and, by the completion date, the stock was up 10.0%, achieving a record share price N284.9/s. So far, the company had bought back only a combined 0.98% of the proposed 10% buy-back.
Given the myriad of challenges that have faced the company this year, from dwindling volumes, rises in operating and finance costs, a plant shut-in by a state government, culminating in lacklustre appetite for its stock (+2.06% ytd), Coronation Research analysts believe the company decided that it is timely to carry out another share buyback in order to carry out its mandate of increasing long-term shareholder value.
”And If history Is anything to go by, we expect to see the share price to appreciate as a result.”
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