Puzzling share buyback scheme at Perak Transit
Perak Transit is facing scrutiny over its decision to initiate share buybacks despite having limited cash reserves and significant debt obligations. Analysts are questioning the move, especially given the company's depressed share price and the managing director's unusual strategy of converting out-of-the-money warrants.
Why it matters
The article highlights potential corporate governance concerns and questionable capital allocation strategies in a publicly traded company, which can impact investor confidence.
BURSA SGX Home Edge Weekly Make The Edge Malaysia your preferred source on Google This article first appeared in The Edge Malaysia Weekly on August 10, 2026 - August 16, 2026
It is fair that Perak Transit Bhd (KL: PTRANS ) wants to undertake share buybacks, considering that the company feels that the fair value of its shares is 73 sen each, whereas the market is pricing the shares at a steep discount.
However, share buyback exercises should only be done by companies sitting on excessive cash, which is not the case with Perak Transit. The company has fixed deposits of RM180.15 million, of which RM150.24 million is tied up as security for its issuance of Islamic bonds.
Moreover, the major shareholders of Perak Transit, which builds and operates integrated public transport terminals (IPTTs) in underserved areas, had a block of shares forced sold in October last year.
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