Depa CEO buys back shares to boost investor confidence

The management of Depa has bought its shares from the Dubai International Financial Exchange (DIFX) after a sustained slide ever since the company was listed on the exchange, Emirates Business has learnt.

The buyback of shares comes despite Depa's good financial results, implying more expectations of the investors. The share purchase could be seen as a sign of confidence in the company by its chief executive officer, maybe to shore up the share price and augment liquidity.

As per investment advisory firm Mac Capital, Depa had notified DIFX about the purchase of its shares, over the whole of last week, by its CEO Mohannad Sweid, while posting its earning result on August 20.

While the price slide may have slowed down after this move, it remains to be seen whether this buying will have any long-term positive impact on the share price.

Sweid was unavailable for comments on the move.

Although, the firm's business is highly seasonal with most of its contract income coming in the second half of the year, Depa reported a 75 per cent year-on-year surge in its bottom line in the first half of financial year 2008 to reach Dh55.6 million.

The interior contracting company bagged a Dh375m contract for the complete fitout of 13 Dubai Metro stations and Dh800m orders for complete fitout works for eight prestigious organisations across the UAE.

The company got listed on the DIFX on April 23, 2008, at $1.53 (Dh5.62). Till date, the company's stock price has plunged 24 per cent to $1.17 and its trading volumes have mirrored the trend.

Mac Capital's figures show that Depa's daily volume has declined from 18.7 million shares upon listing to 5,050 shares traded on September 2 on the back of bearish sentiments in the market.

Depa's CEO has acquired 507,080 shares in the past seven trading sessions, accounting for 0.1 per cent of the shares outstanding in the market. He spent close to $600,000 on this purchasing spree. With this move Sweid owns 11.4 million shares (two per cent of the outstanding shares), according to Mac Capital.

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