No-Moat Caltex Completes Off-Market Buyback in Time to Enjoy Recovering Refiner Margins.
We retain our AUD 33.50 fair value estimate for no-moat Caltex. The company completed its AUD 260 million off-market buyback, the AUD 23.43 price reflecting a 14.0% discount, in line with expectations. Demand was strong, requiring an 86.86% scale back. Shares on issue declined by 11.1 million or 4.3% to 249.7 million. We applaud buybacks when not only is the effective price at a material discount to the market price, but more importantly, the price is at a material discount to fair value. The AU...Caltex Australia is engaged in the purchase, refining, distribution and marketing of petroleum products and the operation of convenience stores throughout Australia. Co. has two segments: Supply and Marketing, which is an integrated transport fuel supply chain which sources refined products on the international market and sells Caltex fuels, lubricants, specialty products and convenience store goods through a network of Caltex, Caltex Woolworths and Ampol branded service stations, as well as through company owned and non-equity resellers and direct sales to corporate customers; and Lytton, which refines crude oil into petrol, diesel, jet fuel and products such as liquid petroleum gas.
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