(Reuters) -Shares of Australia's Reece closed more than 14% higher on Monday in their strongest trading session since February of last year, after the plumbing products supplier unveiled a A$250 million ($164.73 million) worth share buyback plan.
The stock posted its highest close in about one month at A$11.78 and was the top gainer on the broader ASX 200 benchmark, which ended 0.4% higher.
The stock price is close to the midpoint of the company's off-market buyback price range of A$11 to A$13 per share, with the top end representing a 26% premium to Friday's closing level of A$10.32. The company board will determine the final price based on shareholder demand.
"The pricing hasn't been set yet, but it looks like quite an aggressive price," said Jamie Hannah, deputy head of investments and capital markets at investment management firm VanEck Australia.
Despite Monday's rally, Reece shares have declined more than 48% this year and shed nearly 60% in the past year.
The market is happy with this move and thinks that the company buying back shares at this level is a good idea, said Hannah.
Reece said the buyback plan is flexible, where the size of the programme could be expanded depending on demand and pricing but capped at an upper limit of A$400 million.
"Depending on the outcome of this buyback, we may explore further capital management options including a potential on-market buyback," Chairman & CEO Peter Wilson said in a statement.
The company, which reported a 24% drop in annual net profit in August, said it has a strong balance sheet with excess capacity to support this programme.
However, the company outlook remains uncertain, with Reece anticipating a slow recovery in the housing market, particularly in the U.S. where conditions are expected to remain constrained over the next year.
($1 = 1.5177 Australian dollars)
(Reporting by Kumar Tanishk and Sneha Kumar in Bengaluru; Editing by Sumana Nandy and Subhranshu Sahu)
By Kumar Tanishk and Sneha Kumar
