This article first appeared in The Edge Malaysia Weekly on August 10, 2026 - August 16, 2026

It is fair that Perak Transit Bhd (KL:PTRANS) wants to undertake share buybacks, considering that the company feels that the fair value of its shares is 73 sen each, whereas the market is pricing the shares at a steep discount.

However, share buyback exercises should only be done by companies sitting on excessive cash, which is not the case with Perak Transit. The company has fixed deposits of RM180.15 million, of which RM150.24 million is tied up as security for its issuance of Islamic bonds.

Moreover, the major shareholders of Perak Transit, which builds and operates integrated public transport terminals (IPTTs) in underserved areas, had a block of shares forced sold in October last year.

In March last year, Perak Transit managing director Datuk Seri Cheong Kong Fitt had direct equity interest of 16.14% while his wife held 4.94%. He also had indirect equity interest of 7.27%.

After the forced selling in October last year, Cheong had a direct stake of 9.83% and an indirect stake of 4.46%. According to the company’s latest annual report, his wife no longer holds any shares in Perak Transit.

The company’s shares were trading at more than 60 sen each before the forced selling in October last year. The sharp decline in its share price has rattled confidence in the company, which explains its currently depressed price.

Moreover, Cheong has not gone to the market in a big way to buy up shares after the selldown. Instead, he has been converting the company’s warrants, which is surprising. The conversion rate of the warrants is 50 sen, while the share price closed at 21.5 sen last Friday. Why convert warrants that are out of the money?

The top 30 shareholders hold 47.7% equity interest in the company, indicating a loose shareholding structure at Perak Transit.

Considering that the company, which draws revenue from rental and advertising income at its IPTTs, believes the intrinsic value of its shares is 73 sen apiece, shouldn’t the major shareholders be buying shares on the market instead of using the company’s cash to undertake share buybacks?

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