LGMS Berhad Proposes Share Buy-Back of Up to 10% of Issued Shares

Key Points for Investors

• LGMS Berhad is seeking shareholder approval to purchase up to 10% of its total issued shares through a share buy-back authority.
• The proposal will be tabled as Special Business at the company’s Fifth (5th) Annual General Meeting (AGM), scheduled for 26 May 2026 at Le Meridien Petaling Jaya.
• The maximum number of shares that may be purchased is 45,600,000, based on the current issued share capital of 456,000,000 shares.
• The share buy-back will be funded via internally generated funds and/or bank borrowings, subject to a maximum of the company’s retained profits, which stand at RM7,383,000 as of 31 December 2025.
• No LGMS shares have been bought back or held as treasury shares as at the latest practicable date.

Details of the Proposed Share Buy-Back

The authority, if granted, will remain in force until the next AGM, unless renewed or revoked earlier. The buy-back will be conducted via Bursa Malaysia Securities Berhad (Bursa Securities) through appointed stockbrokers. The proposal is not mandatory, but gives the Board discretionary power to execute the buy-back as market conditions dictate.

The company must satisfy a solvency test under Section 112(2) of the Companies Act 2016, ensuring that the buy-back does not render the company insolvent or impair its capital, both at the point of the buy-back and for six months after the declaration by the Board.

• Treatment of Purchased Shares: The Board may choose to:
  • Cancel the purchased shares,
  • Retain them as treasury shares (which may be distributed as dividends, resold, transferred for employee share schemes, or used as purchase consideration), or
  • Partially cancel and partially retain as treasury shares.
• Regulatory Requirements: The buy-back is subject to various Bursa Securities rules, such as:
  • Maintaining a minimum 25% public shareholding spread at all times,
  • Purchasing at a price not more than 15% above the 5-day weighted average market price,
  • Reselling/Transferring treasury shares at not less than the 5-day weighted average market price, or at a maximum 5% discount under specific circumstances,
  • Buy-back must be funded by retained profits only.

Rationale and Potential Impact

• The buy-back aims to enable LGMS to utilise surplus financial resources to purchase its own shares when deemed appropriate, potentially stabilising the share price and enhancing the company’s EPS (earnings per share).
• Cancelled shares will reduce the total number of shares, thus potentially increasing EPS and supporting the share price.
• Treasury shares can be resold if prices improve, realising gains for the company, or distributed as share dividends, rewarding shareholders.
• The buy-back may reduce available financial resources for other investments and could lower retained profits, impacting dividend capacity.
• The Board assures that sufficient cash will be maintained for working capital and dividends before executing any buy-back.

Financial Effects

• Share Capital: If the buy-back is fully executed and all shares are cancelled, the share capital will reduce from 456,000,000 to 410,400,000 shares. If retained as treasury shares, the number does not change.
• Net Assets (NA): The effect depends on the buy-back price relative to NA per share. Buying above NA per share reduces NA, while buying below increases it. Resale of treasury shares at higher prices increases NA.
• Earnings & EPS: EPS is expected to increase as the number of shares decreases, assuming profits remain stable.
• Working Capital: Buy-backs will reduce working capital, depending on the buy-back amount and price. Resale of treasury shares will replenish cash flows.
• Dividend Payments: No anticipated impact, but dividend proposals will consider profitability, cash flow, and capital needs.
• Directors’ and Substantial Shareholders’ Shareholdings: Proportionate shareholding will increase due to the reduction in the total number of shares.

Potentially Price Sensitive Issues

• Share Price Support: The share buy-back may support LGMS’s share price by reducing supply and increasing demand.
• EPS and Valuation: Higher EPS (from a reduced share base) is typically viewed positively by investors.
• Takeover Code Implications: If any shareholder or party acting in concert increases their holding by 2% or more (from 33% to under 50%) within 6 months due to the buy-back, a mandatory takeover offer may be required. The Board will avoid triggering this unless an exemption is granted.
• No Share Buy-Backs in Past 12 Months: This is the first time LGMS is seeking this authority; no shares have been bought back or held as treasury shares in the past year.
• Historical Share Price Volatility: LGMS’s share price has ranged from RM1.04 (high) to RM0.46 (low) over the past 12 months, with the last traded price at RM0.48.

Other Material Information

• Material Contracts: LGMS acquired a 27% stake in Antarex Holdings Sdn Bhd in January 2026 for RM22.68 million, which may be relevant for future strategic direction or cash flows.
• No Material Litigation: The group is not involved in any material litigation as of the statement date.
• Documents for Inspection: The company’s constitution and audited financials for 2024 and 2025 are available for inspection at LGMS’s registered office.

What Shareholders Should Do

• Shareholders should carefully consider the statement and attend the AGM or appoint a proxy to vote on the proposed share buy-back authority.
• The Board recommends voting in favour of the proposal, citing it as being in the company’s and shareholders’ best interests.

Disclaimer

This article is prepared for informational purposes only and does not constitute financial advice or a recommendation to buy, hold, or sell any securities. Investors are advised to make their own independent assessment and consult their financial or professional advisers before making any investment decisions. The information above is based on the official statement and may be subject to changes pending shareholder approval and market developments.

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