On January 2, 2019, Katana Capital Limited (ASX: KAT) has announced its plan of on-market buyback of shares. The repurchase of shares would be starting from 2 January 2018 and would continue for one year ending on 31 December 2019, unless terminated earlier by the company. The company also stated that its shares have persistently traded at a discount to their published net asset backing.
The maximum number of shares to be repurchased from the market is approximately 4,267,154. The buyback program is considered as an effective tool to effectively and judiciously use the portion of available cash resources. Patersons Securities Limited is the broker who will act on the company’s behalf.
The company had conducted the buyback scheme of its shares from the market in 2018 as well. It involved 1,367,657 shares being repurchased and the total consideration paid was $1,050,560. The highest price paid was $0.81 on 2 February 2018 and the lowest price paid was $0.75 on 10 April 2018.
On December 31, 2018, the company had confirmed cancellation of a total of 172,537 Ordinary Shares acquired via Katana’s share buyback. Katana’s Capital’s share has been adjusted to 42,671,540 Ordinary Shares.
The company’s flagship product is its long-only fund – “The Katana Australian Equity Fund” (KAEF). The fund’s top 10 investments as at 31st October 2018 are: Mineral Resources Ltd (7.44%), Pioneer Credit Ltd (4.67%), Macquarie Group Ltd (4.59%), National Australia Bank (4%), Woodside Petroleum Ltd (3.66%), Viva Energy Group Ltd (3.32%), BHP Billiton Ltd (3.03%), CSL Ltd (2.94%), Australia and New Zealand Banking Group (2.70%), and Transurban Group (2.68%). Blue chip companies form the largest holdings provide safety and liquidity and additionally, the fund enjoys added value through emerging/high growth stocks which are a right blend of safety and performance. The fund employs a more significant number of smaller positions to mitigate risk while still being a high conviction, and the fund has maintained cash through the cycle which is typically within 15-35 % band.
Financial Performance: Net cash outflows from operations were $5,347,048 during the year as compared to an inflow of $2,342,367 in the previous year. This reflects the Group’s investment from the Australian equities market. Net cash flows for the financial year ending 30 June 2019 are expected to remain neutral and will be subject to the Group taking advantage of opportunities within the Australian equities and the general performance of the market.
The total net investment income attributable to Katana Capital Limited for the year was $10,345,491, ($2,551,494 in last year). The Company’s net profit after income tax for the year stood at $5,644,770 in 2018, as compared to $935,276 in 2017. The diluted earnings per share for the year stood at 12.85 cents per share.
On Balance Sheet front, Net Assets has increased by 9.8% to $41,283,992 in FY18 over the $37,606,993 in the corresponding period in 2017. As at 30 June 2018, the company had cash and cash equivalents of $11,625,349 ($8,246,072 in last year).
Stock performance: The shares are currently trading at A$0.750, up by 1.35%, with a market capitalization of circa $31.58 Million. On January 2, 2019, Katana Capital ended the session on the negative note as the share price has settled at A$0.740 which implies the fall of A$0.010 per share or -1.333%.
In the period of the previous six and three months, the stock delivered the return of -3.27% and-4.52%, respectively. However, during the last month, KAT provided a return of 1.37%.
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