Şişecam Stock Buyback
(Please click to read the Thread in Turkish)
Türkiye Şişe ve Cam Fabrikaları A.Ş. was founded in 1936 by İş Bank and currently consists of a holding company with 57 subsidiaries, 1 joint venture 2 associates and 1 joint activity.
Şişecam is among the world’s most prestigious manufacturers and with its 87 years of corporate history, it has a considerable experience and high degree of specialisation. As a global company, Şişecam has production activities spanning 14 countries on 4 continents, and sales in more than 150 countries. For further reading, analysis and valuation reports you can click the links below the page, but following this brief introduction, let me cover now the stock buyback program that Şişecam has launched at the beginning of 2021, which was augmented and still in effect.
1 – Launch of Buyback Program(s)
On February 26th, 2021 Şişecam has announced a 150,000,000 nominal TRY share buyback program. The purpose of this decision was discrepancy between price and value. According to the management, share price was not reflecting the actual performance of the company. In this vein, Şişecam allocated 1,200,000,00 TRY funds, which would be financed through the Company’s internal resources (Figure 1).
The very first purchase based on this program made on March 15th, 2021 with three different orders. In Figure 2, I have plotted daily closing price of shares with white line from 01.01.2021 to 14.07.2021, and the latest price was 49,22 per share. In the same graph you see the buyback transactions in yellow bars. I have also consolidated the orders which took in the same day with respective quantity and price to attain a weighted average price, as well as to present those figures compatible with the daily closing prices. As you can follow the highest purchase was made on 23.12.2021 with roughly 8 million shares. It is also apt to emphasise that the most intense purchase of share were made between April and May 2022. Considering the global retreat and sale in financial markets, and gloomy outlook at those days, it was a decisive act and in hindsight it looks now as a sign of confidence to the Company’s own business.
However, the negative side of that act was running out of funds that were allocated for this purpose. At the end of June 29th, 2022 Şişecam has repurchased 8,545,076,900 shares with the nominal value of 85,450,769 TRY. The funds used for these transactions summed to 1,182,026,998.27 TRY, which was approximately 99% of the maximum amount allocated for the program. In this regard, the Board of Directors decided to initiate a second buyback program with a maximum amount of 3 billion TRY.
Figure 3, presents the details of this decision.
From that date on, Şişecam had bought more shares when there was a window of opportunity. In the meantime there were two occasions in which Şişecam sold shares from the buyback program. First one was on 29.11.2022 with a 50.000.000 shares to a foreign institutional investor from 36,96 TRY per share price. And the second was to Efes Holding A.Ş. on 10.05.2023 with a 17.000.000 shares from the 35,00 TRY per share.
Figure 4 shows these two transactions details.
Including the last buyback on 03.05.2023 with a sum of 441,680 shares, current position is as in Figure 5. As a result of these all transactions, SISE shares owned by Şişecam are 42,291,573 and the ratio of the shares bought back to the Company’s capital is currently at 1.38%.
2 – Executive Summary
Şişecam attaches utmost importance to sustainable, value creating, environment friendly and inclusive growth and investments. In this regard, the Company undertakes huge investments, measured risks and global initiatives despite geopolitic and macroeconomic uncertainties. In addition to that Şişecam shares its excess cash from net income with its shareholders as dividends in a continues and increasing form. Finally, the resources of the Company are also used for stock buyback programs with the purpose of increasing shareholder’s value when the market price of shares do not reflect the Company’s performance.
In Figure 6, I have presented these two buyback programs with its striking features. Since the launch of the program, 576 buy orders have been realised in 62 different transaction days. Şişecam has acquired 109,291,573 shares by spending 1,849,057,214 TRY. Programs are still in force and the Company has a room to fulfil its program or extend it depending on the market conditions.
In Figure 7, you can see the dividends paid at the end of May each year for last three years. Although the graph covers the period from 01.01.2021 to 14.07.2023, this is a consistent fact for more than a decade. Blue bars represent the total amount of cash returned to shareholders and explanations above those bars indicate the dividends paid per share. On May 31st, 2023 total dividends sum was 2,100,000,000 TRY and dividends per share was 0.6856 TRY.
3 – Price and Value
Value is like a magnet; it pulls the price sooner or later to itself.
Price and Value
Şişecam is one of the companies that I follow closely, run a DCF valuation in every quarter and have in my global portfolio for years. As you can see in Figure 8, I have plotted my intrinsic value results per share (yellow) for each quarter and matched those with the closing price of shares (white) at the day of valuation. Only in one occasion value was below the price and in line with the approaching elections, it was the only time I made a reduction in my portfolio. I must also state that I have bought back shares at the retreat and was lucky to be on the same page with the Şişecam for their buyback decisions in many occasions.
I hope this figures, analysis and calculations are also useful for you, too. For further documents and news please check Şişecam Investor Relations.
With this opportunity, I’d like to thank Prof. Dr. Ahmet Kırman, (Chairman), Mr. Görkem Elverici (CEO) of Şişecam for their effective risk management, rational decision-making and commitment to values, as well as to all employees for their hard work, and investors for their trust.
Ergun UNUTMAZ, 20.07.2023
You can read my previous works on similar subjects by clicking the links.
ŞİŞECAM Valuation 2023/q1
ŞİŞECAM Outlook 2022/q4
ŞİŞECAM Valuation 2022/q2
About Şişecam Merger
I wish you all the best.
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