Japanese information system vendor Fujitsu Ltd. has announced a big share buyback scheme for a second year running, joining a host of companies that are stepping up efforts to woo investors.
(Bloomberg) — Japanese information system vendor Fujitsu Ltd. has announced a big share buyback scheme for a second year running, joining a host of companies that are stepping up efforts to woo investors.
Fujitsu will buy up to 6.37%, or 150 billion yen ($1.1 billion), of its own shares, following a similar-sized purchase during the last financial year, according to a company statement on Thursday. Separately, its rival Hitachi Ltd. unveiled plans to buy 100 billion yen, or about 2.13%, of stock after undertaking its first buyback program in eight years.
The announcements come on the heels of a call by the Tokyo Stock Exchange for companies that are trading below book value to outline capital improvement plans.Â
Meanwhile, Daiwa Securities Group Inc. said it will buy 25 billion yen of its shares, the same amount as last year. The purchase amounts to about 2.41% of its outstanding stock. Daiwa trades at a price-to-book ratio of 0.63.
Tokyo Gas Co., which announced a buyback on Wednesday, trades at a price-to-book ratio of 0.76.
The large number of companies trading below book value — which suggests investors lack confidence in their ability to generate profits — is seen as the main reason why Japanese stock prices are sluggish. The Topix Index trades at a price-to-book ratio of 1.25, compared with 4.01 for the US S&P 500.
But, not every share buyback is motivated by a desire to boost a company’s market value. Fujitsu and Hitachi, for instance, are both trading at ratios of well above 1.
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