Hiap Huat Holdings Berhad Proposes Renewal of Share Buy-Back Authority: Key Details for Investors

Summary of Key Points

• Hiap Huat Holdings Berhad is seeking shareholder approval for the renewal of its share buy-back authority at the upcoming 16th Annual General Meeting (AGM) scheduled for 22 May 2026.
• The proposed authority allows the company to buy back up to 10% of its total issued shares on Bursa Malaysia.
• As at 1 April 2026 (latest practicable date), Hiap Huat had 399,138,330 issued shares, including 4,113,000 shares already held as treasury shares.
• The buy-back will be funded using internally generated funds, external borrowings, or a combination, not exceeding the company’s retained profits of RM9,751,511 as per the latest audited accounts (FY ended 31 December 2025).
• The Board can decide to cancel the purchased shares, retain them as treasury shares, resell them on Bursa, transfer as share dividends, or use them for other legal purposes.
• Directors and major shareholders are not expected to benefit except for the proportional increase in their holdings should the buy-back reduce total shares outstanding.
• The company did not buy back, resell, or cancel any shares in the past 12 months but retains the 4,113,000 treasury shares from earlier transactions.
• The public shareholding spread is currently at 62.32%, and the company will ensure it does not fall below the 25% minimum required by Bursa Malaysia.
• No substantial shareholder is expected to trigger a mandatory general offer under the Malaysian Code on Take-Overs and Mergers as a result of this buy-back authority.
• The Board recommends shareholders vote in favour of the proposal, seeing it as fair, reasonable, and in the best interests of the company.

Investment-Relevant Details

Maximum Shares and Funds Involved

The company seeks authority to repurchase up to 39,913,833 shares (10% of issued shares), including shares already held as treasury shares. Funding is strictly sourced from retained profits and/or borrowings, with the current retained profits standing at RM9.75 million.

Timing and Duration

If approved, the buy-back authority is valid from the date of the 16th AGM until the next AGM, or until revoked or varied by shareholders. The Board retains flexibility in timing and quantum, depending on market conditions, strategic needs, and the company’s financial situation.

Potential Impact on Share Price and Shareholder Value

• Share buy-backs can be price sensitive events: They may support or increase the share price by reducing supply, especially if shares are cancelled, or by signaling management’s confidence in the company’s prospects.
• Improved Earnings Per Share (EPS): With fewer shares in circulation, EPS is expected to rise, potentially enhancing returns for shareholders.
• Potential for Share Dividends: Treasury shares can be distributed as share dividends, providing an alternative form of reward to shareholders.
• Flexibility for Capital Management: Treasury shares may be resold at higher future prices, transferred under employee share schemes, or used as consideration for acquisitions.
• Drawbacks: Buy-backs reduce immediately available cash and may limit the company’s ability to pursue other investments or pay cash dividends. If executed when shares are overvalued, buy-backs can destroy value.
• Public Spread and Major Shareholder Concerns: The company has confirmed that it will not breach Bursa Malaysia’s 25% public shareholding spread requirement, and no substantial shareholder will be compelled to make a mandatory takeover offer under current holdings.

Potential Scenarios and Illustrative Effects

• If all bought-back shares are cancelled: Issued share capital would reduce from 399,138,330 to 359,224,497 shares.
• On Directors’ and Substantial Shareholders’ Holdings: Their percentage holdings will increase (proportionally) if the share base shrinks, even if their absolute shareholding remains unchanged.
• On Net Assets (NA) and Gearing: NA per share may increase or decrease depending on the buy-back price relative to NA per share. Gearing could rise if borrowings are used.
• On Dividends: With fewer shares, future cash dividends per share may rise. Treasury shares may also be distributed as dividends.
• On Working Capital: Immediate reduction if cash is used for buy-backs, but could increase if treasury shares are later resold at a profit.

Historical Share Price Movements

The last traded price as at 1 April 2026 was RM0.120.

Important Information for Shareholders

• The 16th AGM is set for 22 May 2026, 10:00 a.m. at Greens III, Sports Wing, Tropicana Golf & Country Resort, Petaling Jaya, Selangor.
• Form of Proxy must be lodged by 20 May 2026, 10:00 a.m. for those not attending in person.
• Shareholders are urged to read the full Share Buy-Back Statement and Appendix for further details, and to consider the proposal’s impacts on the company’s capital structure and shareholder value.
• No director or major shareholder has direct or indirect interest in the proposal except for the proportional increase in their shareholding percentages.
• Shareholders can inspect the company’s Constitution and latest financial statements at the registered office during normal business hours until the AGM.

Conclusion

The proposed renewal of the share buy-back authority is a significant corporate action that may positively affect Hiap Huat Holdings Berhad’s share price and shareholder value through potential EPS accretion, capital management flexibility, and support for the market price. However, it also entails opportunity costs and may impact working capital and dividend capacity. Investors should monitor the AGM outcome and further announcements from the company regarding the execution of buy-backs.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should consult their own financial advisors before making investment decisions. The writer and publisher bear no responsibility for any losses or damages arising from reliance on the information provided herein.

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