More On IOI Corp

Posted yesterday. Comments On IOI's Right Issue: Version II

In that posting I highlighted one simple issue.

From Feb 2008 quarterly earnings (for period ended 31/12/2007) to Feb 2009 quarterly earnings (31/12/2008), IOI announced it made some 2.2 Billion in earnings. And despite making so much money, rm2.276 Billion in this period, IOI's net debt actually increased by 1.918 billion.

My inquisitive mind, asked where did the money go.

Got the following comment.

• jitseng said...
  The money to stock buys back.The used about 1.6b

Now if I search Bursa website, I would find this announcement dated 22/6/2009. Notice of Shares Buy Back - Immediate Announcement

In it, it states that the cumulative shares bought back was 291,244,500.

Now I give it a benefit of a doubt, and make a simple goofy assumption that all the shares bought back was during this period and I would also assume what jitseng is saying is correct.

So assuming IOI spend some 1.6 billion in share buybacks.

Now I am more dumbfounded because I would look at it in an even more simplistic manner.

This company made some 2.2 Billion in profits and then it spends some 1.6 billion in share buybacks.

Errr..... wazzap doc?

Does this sound like a good business economics at all?

Does such a corporate exercise makes business sense at all?