The second reason prompting any public company buying back its own shares is the high level of cash in hand with no immediate deployment plan. Buying back one's own shares with excess cash in hand will reduce the amount of issued shares in circulation, thereby enhancing EPS, Dividend Yield and even NTA of the company if those shares so purchased from the open market are later cancelled.

As shown by the rapid repayment of Heveaboard's huge debts in the last few years which were incurred during the stewardship of Yoong Tein Seng aka Tenson Yoong as the then Group MD, the rate of cash generation was aided immensely by the sliding Ringgit in 2015 and better margins enjoyed owing to the record low input costs of raw material like rubber tree residuals and adhesive chemicals.

However fast it may have been but still, Heveaboard is only expected to fully repay the last instalment of around RM23m debt to its creditors and banks in June 2016 at the earliest. As a matter of fact, the current Group MD once told his diehard bank-based analyst (name omitted to avoid embarrassment as he has called a high target price of HEVEA at RM 2.00 a share, which had dropped some 36% todate to RM 1.16 instead) that he is looking to renegotiate with the creditors and banks to defer the repayment to another quarter as he "likes the cheap interest rate......"

Tenson Yoong is noted to be an aggressive businessman with his dare-all strategy. Of course, he learnt a painful lesson in the last Heveaboard near-oblivion debacle of 2008 which plunged HEVEA shares price to 7 sen a share at the lowest.  And he paid with his own health as well when he sustained a stroke not long after the debacle and wheelchaired until today.

Fast forward to present day, his successor is his only son as the Group MD now. The young Group MD is now toying with the idea to postpone an extra quarter in writing the last repayment cheque of RM23m.....

I have no idea why he "likes the cheap interest rate", but I am wary of the old saying of "Like father like son" and investors should not be the guinea-pig for another roller-coaster ride.

This bring us to finding the rationale of Heveaboard buying back its own shares. The million dollar question to ask now is does Heveaboard has the high level of cash in hand to embark on the Shares Buyback Scheme? 

I don't think so, given aforesaid procrastination of writing the last cheque of RM23m to creditors and bankers. A more likelihood scenario may be that the Board is nibbling some picayune amount of shares as a show piece amid the plunging HEVEA shares price.

The third reason prompting any public company buying back its own shares is the need to maintain a certain level of its shares price due to the issuance of financial derivatives or debt papers that are still in circulation.

At the moment Heveaboard does not has any such derivative in circulation.

In summary, I have deduced 3 out of the 4 possibilities that would have given credence to Heveaboard invoking the Shares Buyback Scheme, and they are all in negation.

The real reason then must be the 4th factor. And possibly as tipped by an insider, the X factor.

15.2.2016