GNI Group Ltd

TSE:2160

Shareholder Yield is an integrated metric that represents the total returns a company delivers to its shareholders, including dividends, share buybacks, and debt reduction. It offers a holistic view of a company's capital return strategies, going beyond simple dividend yields to encompass all forms of shareholder returns.

The calculation of Shareholder Yield involves summing the dividend yield, buyback yield, and debt paydown yield:

• Dividend Yield is calculated by dividing the annual dividends per share by the stock price per share.

• Buyback Yield reflects the decrease in shares outstanding, showing how much a company is investing in repurchasing its shares.

• Debt Paydown Yield measures the reduction of debt in relation to the company’s market capitalization, highlighting efforts to reduce financial liabilities.

High Shareholder Yield is often associated with superior long-term performance in the stock market, making it a crucial measure for investors seeking stocks that consistently deliver high returns through dividends, buybacks, and effective debt management. This metric highlights the importance of looking beyond traditional dividend yields to consider how companies return capital to shareholders in other ways, enhancing overall investment analysis.

Buyback Yield measures how much a company reduces its outstanding shares through repurchases, expressed as a percentage. It is calculated by taking the decrease in shares outstanding during a period, dividing it by the total shares at the beginning of that period, and then converting this figure into a percentage.

This metric is crucial for calculating Shareholder Yield as it directly reflects the company’s efforts to return value to shareholders. By reducing the number of shares, buybacks can increase earnings per share and potentially boost the stock's price. Including Buyback Yield provides a fuller understanding of how capital is used to enhance shareholder returns, alongside dividends and debt reduction.

Debt Paydown Yield measures the amount of debt a company repays within a specific period, shown as a percentage of its market capitalization. It is calculated by taking the reduction in total debt from the beginning to the end of the period, dividing this amount by the company's market capitalization at the start of the period, and then expressing the result as a percentage.

This metric is important for calculating Shareholder Yield because it indicates how the company is using its capital to decrease financial liabilities, which can strengthen its financial health and potentially enhance shareholder value. Including Debt Paydown Yield in the Shareholder Yield calculation gives investors insight into the company's commitment to reducing debt alongside returning value through dividends and buybacks.

Price return decomposition is a method of analyzing the factors that contribute to the changes in the market capitalization of a company.

The price return decomposition breaks down the market cap return into two main components: the change in the price-to-earnings (P/E) multiple and the change in company earnings (as well as the change in revenue and net margin).

The change in the P/E multiple reflects the effect of changes in investor expectations and sentiment towards the company. A higher P/E multiple means that investors are willing to pay more for each dollar of earnings, indicating higher expectations for future growth. Conversely, a lower P/E multiple indicates lower expectations.

The change in earnings, on the other hand, represents the actual changes in the company's earnings over the given period.

The change in revenue and net margin are two other factors that can impact a company's market cap. An increase in revenue indicates that the company is generating more sales, while an improvement in net margin indicates that the company is becoming more efficient and generating more profit from each dollar of sales.