Hextar Healthcare Berhad: Proposed Renewal of Share Buy-Back Authority

Key Points from the Share Buy-Back Circular

• Proposal: Hextar Healthcare Berhad (“Hexcare”) is seeking shareholder approval at its upcoming 30th Annual General Meeting (AGM) to renew its authority to buy back up to 10% of its own shares, a move permitted under Bursa Malaysia’s Main Market Listing Requirements.
• AGM Details: The resolution will be tabled at the AGM scheduled for Friday, 22 May 2026, at 10:30 a.m. at Impiana Hotel Ipoh, Perak.
• Proxy Voting: Shareholders unable to attend in person may appoint proxies, with forms to be lodged by Wednesday, 20 May 2026, at 10:30 a.m.
• Maximum Buy-Back: The company can purchase up to 10% of its issued shares, which currently translates to a maximum of 28,065,288 shares, taking into account existing treasury shares.
• Funding: Buy-backs may be funded by internal resources and/or borrowings, up to the aggregate retained profits. As at 31 December 2025, retained profits stand at RM5,491,356.
• Share Treatment: Purchased shares may be cancelled, retained as treasury shares, distributed as dividends, resold, transferred for employee share schemes, or used as purchase consideration. Treasury shares have no voting rights or dividend entitlements.
• Price Limits: Purchases cannot exceed 15% above the weighted average market price for the preceding 5 market days. Resales must be at least the weighted average price for the previous 5 days or not more than 5% discount, subject to timing and cost constraints.
• Takeover Code Implications: Substantial shareholders could trigger a mandatory general offer if their holdings cross certain thresholds as a result of buy-backs, but they have stated they have no intention to trigger such an event.
• Public Shareholding Spread: Hexcare currently has a public spread of 63%, well above Bursa’s minimum requirement of 25%. Buy-backs will not be conducted if they threaten compliance.
• Historical Share Price: In the past 12 months, Hexcare shares traded between RM0.070 and RM0.140, with the last price at RM0.080 (as at 10 April 2026).
• Board Recommendation: The Directors unanimously recommend shareholders vote in favour of the renewal, viewing it as beneficial for Hexcare.
• Material Contracts/Litigation: No material contracts or litigation reported.

Detailed Analysis and Implications for Investors

1. Impact on Share Capital and EPS:
If Hexcare cancels shares purchased via buy-back, the issued share capital will decrease from 1,193,383,881 to 1,074,045,493 shares. This reduction is expected to strengthen earnings per share (EPS) and return on equity, potentially making the stock more attractive. If shares are kept as treasury shares, the capital remains unchanged, but these shares cannot vote or receive dividends, impacting dilution calculations.

2. Financial Effects:
The buy-back will reduce Hexcare’s working capital and cash reserves. However, treasury shares may later be resold, potentially at a gain, or distributed as share dividends to shareholders. The company’s ability to fund the buy-back depends on retained profits and/or borrowings, and the Board commits to ensuring solvency and prudent cash flow management.

3. Shareholder and Takeover Code Risks:
Buy-back actions could trigger a mandatory general offer under Malaysia’s Takeover Code if substantial shareholders’ holdings breach thresholds. The Board will monitor this and has received assurances that no mandatory offer will be triggered unintentionally.

4. Public Shareholding Spread:
Ensuring compliance with Bursa Malaysia’s 25% minimum public spread is critical. Hexcare’s current spread is robust, but any buy-back will be carefully managed to avoid regulatory breaches that could affect trading liquidity and market perception.

5. Share Price Sensitivity:
Share buy-backs generally signal management confidence and may support the share price by reducing supply and improving EPS. The potential for reselling treasury shares at higher prices or distributing them as dividends offers further upside. However, investors should note the temporary reduction in financial resources and the possible opportunity cost of foregone investments.

6. Board Recommendation and Governance:
The Board’s unanimous recommendation underlines the perceived benefits of the proposal. No Director or substantial shareholder has a material interest in the buy-back or resale of treasury shares, supporting transparency and good governance.

Important Considerations for Shareholders

• Buy-back authority is price sensitive: It has the potential to affect share prices positively, primarily through EPS enhancement and signaling management’s confidence in the company’s value.
• Liquidity and trading: The reduction in shares could increase demand and trading activity if the buy-back is executed, especially if shares are canceled.
• Dividend policy: Buy-back does not affect the Board’s dividend policy, but future dividends may include treasury shares.
• Regulatory compliance: Ensuring public spread and adherence to takeover rules is crucial to avoid disruption or penalties.
• No material contracts or litigation: No adverse legal or contractual risks currently affect Hexcare.

Conclusion

The Proposed Renewal of Share Buy-Back Authority is a strategic move by Hextar Healthcare Berhad to optimize capital structure, potentially enhance shareholder value, and signal management confidence. Investors should closely monitor the execution of the buy-back, its impact on EPS and share price, and ongoing compliance with regulatory requirements. Shareholders are strongly encouraged to review the proposal and participate in the upcoming AGM or via proxy. Given the potential for share price movement, this is a significant development for Hexcare investors.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should seek independent professional advice before making any investment decisions based on the content herein. The information provided is based on publicly available documents and may be subject to change.

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