Greenbay Properties, the share price of which has plunged nearly 50% in 2018, appears to be taking steps to stem the tide.
The group went from being among the best-performing real estate stocks in 2017 to one of the worst in 2018.
The infrastructure and real estate group will buy back up to 4.99% of its issued share capital, saying: "It is in the best interest of shareholders to proceed with the proposed buy-back, due to the fact that the price at which the shares of Greenbay are trading currently represents a significant discount to the intrinsic value of the company.
"A reduction in share capital will therefore have the effect of increasing the net asset value per share of the company."
It owns shares in listed infrastructure and listed real estate companies and invests in direct property in Europe.
Greenbay forms part of the Resilient group of companies, the members of which have lost significant value in 2018 following critical reports by asset managers and hedge funds, some of whom have accused it of share price manipulation.
Greenbay’s share price is down 46.27% in 2018. It climbed 8.73% on Thursday trading ex-dividend to close at R1.37.
In 2017, Greenbay’s share price rose 60%.
Group CEO Stephen Delport said in April that its assets and business case remained strong over the long term.
The shares that would be bought back by the company would be held as treasury shares, it said.
Garreth Elston, a real estate analyst at Golden Section Capital, said he disagreed that the company was trading at a significant discount to net asset value (NAV). "Our view is that the justified current NAV of Greenbay is R1.34, so I don’t see this significant discount mentioned."
The most recent set of financial results from Greenbay was disappointing, Elston said, adding that the company had lagged on deploying its capital into physical property or direct infrastructure investments.
"That being said, the infrastructure pipeline that the company has mentioned looks positive, but Greenbay has to deliver on these acquisitions in order to regain investor confidence," Elston said.
"With the majority of its assets still being in equity derivatives, we have always been concerned by the impact of market volatility on the company," he said.
"It has though been positive to see that directly held equity holdings have increased to 46.9%," Elston said.
Greenbay has said it wants to invest more in infrastructure concessions such as those for toll roads and airports.
Wynand Smit of Anchor Stockbrokers said that the decision to buy back shares "essentially shows [the] management think its own shares offer better value than external investments options currently on the table for them.
"Otherwise they would have used that circa R550m to R700m cash to deploy in another investment."
Smit said that the buy-back made sense given that the company had substantial cash-like resources as well as a low loan-to-value.