Yangzijiang Shipbuilding (SGX:BS6) saw its stock price plummet by 16.13% in Monday's trading session, despite the company's recent share buyback program and claims of undervaluation. The significant drop comes as a surprise, given the seemingly positive news surrounding the company.
On Friday, Yangzijiang Shipbuilding repurchased 1 million shares in the open market for SG$2.2 million, or SG$2.2 per share, as part of its mandated buyback program for approximately 395.1 million shares. This move, typically seen as a sign of confidence from management, failed to prevent the stock's sharp decline.
Adding to the complexity of the situation, a recent valuation analysis suggested that Yangzijiang Shipbuilding might be undervalued by as much as 32% based on discounted cash flow models. The analysis estimated a fair value of S$3.18 per share, compared to the current trading price. However, investors appear to have disregarded this potential upside, focusing instead on other factors driving the stock's downward movement.
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