On the evening of November 30, Midea Group issued the "Suggestive Announcement on the Proposed Change of the Use of Repurchased Shares", aiming at the remaining 6980 in the share repurchase plan in 2021790,000 shares, which was changed to "used to cancel and reduce the company's registered capital". Based on the ** price of the day, the market value of the shares to be cancelled is about 3.6 billion yuan.
Since the beginning of this year, there has been an increase in the number of new repurchase plans for listed companies, and the number of plans for cancellation has also increased. According to the "** reporter", in November alone, a number of listed companies issued relevant announcements on changing the purpose of repurchasing shares and canceling them, and most of them changed the purpose of repurchased shares from "for employee stock ownership plans or equity incentive plans" to "for cancellation and corresponding reduction of registered capital".
The increase in the number of companies that have repurchased shares for cancellation is one of the important signals of the bottom of the market. Yang Chao, a strategic analyst and team leader of the China Galaxy Research Institute, said that the number of repurchased shares means that the current company's stock price is undervalued, and listed companies are taking measures to enhance the company's investment value, and the repurchase of shares for cancellation of the company, there are more high-quality enterprises, in the current economic recovery situation, indicating that the market sentiment is gradually boosting. Buyback write-offs can boost investor confidence to a large extent and herald a gradual recovery of the market.
The number of canceled repurchases by listed companies has increased.
On November 28, BOE A announced that the company intends to change the use of repurchased shares in 2021, changing "for the implementation of the company's equity incentive plan" to "for cancellation and corresponding reduction of registered capital", and effectively improve the return on investment of the company's shareholders and maintain the company's value by further improving the level of earnings per share. According to the reporter's incomplete statistics, since November, there have been 7 companies such as urban construction development and Xidiwei issued announcements on changing the purpose of repurchasing shares and canceling them.
Li Chang, a strategic analyst at Cinda** R&D Center, told the reporter that the repurchase of shares for cancellation is one of the means of dividend distribution. The cancellation of the repurchased shares means that the company's share capital is reduced, and the EPS (earnings per share) is increased under the condition that the current profit remains unchanged, which is conducive to boosting investor confidence and stabilizing the stock price to a certain extent. In addition, the cancellation of the repurchased shares can optimize the company's equity structure and protect the rights and interests of the original shareholders.
Taking Midea Group as an example, after the cancellation of the repurchased shares, the total share capital of Midea Group will increase from 702.5 billion shares fell to 695.5 billion shares;to the company 2022 year 295The net profit attributable to the parent company of 5.4 billion yuan is estimated that after the cancellation of the repurchased shares, the net income per share of Midea Group will increase from 42 yuan shares increased to 4$25 shares.
Yang Chao believes that the cancellation of repurchased shares will have an immediate effect on enhancing the rights and interests of shareholders of listed companies and will have a positive impact on the company. First of all, it is the company's positive response to market changes, and at the same time, it shows the company's determination to increase earnings per share and net assets and pursue long-term stable development. Secondly, share cancellation can optimize the company's capital structure, reduce financial risks, improve the company's long-term investment value, and stabilize the company's development. Finally, buybacks and write-offs may cause other companies to follow suit, further promoting the healthy development of the capital market.
Optimize the shareholding structure.
Since the beginning of this year, the enthusiasm for repurchase of listed companies has been high, especially since August, and the repurchase plan has been intensively released. According to the statistics of Flush iFinD, as of December 1, 632 new repurchase plans have been added to A-shares this year, a year-on-year increase of 232%, and the total upper limit of the proposed repurchase amount is 11863.8 billion yuan.
In the repurchase plan, 564 shares were repurchased for equity incentive plans or employee stock ownership plans (including the cancellation of unused remaining repurchased shares), accounting for 8924%, while about 5% were used for write-offs, and about 5% were used for convertible bonds and in the secondary market**.
The purpose of the repurchased shares is different, and the meaning of the listed company and investors is also different. Yang Chao said that equity incentives and employee stock ownership plans can stimulate the enthusiasm of employees, closely combine the interests of employees with the interests of the company, help to enhance the motivation of employees, and promote the company's performance growth and long-term sustainable developmentThe convertible debt-to-equity swap converts the company's debt into equity, which helps to optimize the company's capital structure, reduce financial risks, and reduce the company's debt burden.
However, Li Chang said that if the repurchased shares are used for equity incentives and employee stock ownership plans, some of them may eventually flow back to the secondary market.
The use of share buybacks for write-offs has been more pronounced in boosting stock prices and EPS. "The cancellation of repurchased shares is a way for the company to reduce its registered capital and optimize its equity structure. This can increase the company's earnings per share and enhance the value of the company's investment. For investors, it amounts to a 'non-tax dividend' that can bring direct benefits to existing shareholders. Yang Chao said.
A number of companies made large buybacks during the year.
Since the beginning of this year, the repurchase amount of listed companies has remained high. According to the statistics of Flush iFinD, as of December 1, 944 listed companies repurchased a total of 1,293 in centralized bidding transactions during the year1.5 billion yuan. Among them, 316 companies repurchased more than 100 million yuan, and 20 companies such as Ping An of China, Rongsheng Petrochemical, and Haier Smart Home repurchased more than 1 billion yuan.
Large-scale buybacks by listed companies have a positive effect on market sentiment and the company's stock price. Yang Chao said that the timely repurchase of listed companies demonstrates the confidence of listed companies in economic recovery, and has a short-term "disk protection" effect, which helps to boost market confidence. Secondly, it is conducive to the optimization of the company's capital structure and the realization of the company's financial and strategic goals. In addition, as a market value management behavior, buyback** can also stabilize or increase the stock price, protect the actual value of the company, and contribute to the long-term healthy development of the company.
The interviewed experts believe that in the context of the encouragement and support of the regulatory authorities, the scale of A-share companies' repurchases is expected to continue to increase.
Li Chang said that with the continuous improvement of relevant supporting rules and regulatory measures, repurchase, as an important means of capital operation in the market value management of listed companies, is conducive to stabilizing market expectations to a certain extent, promoting the value discovery of low-valuation listed companies, and has a positive significance for the performance of the A-share index. At the same time, the listed company buys back based on its confidence in the company's future development and recognition of the company's long-term value, which not only shares the company's development dividends, but also reflects the company's long-term investment value. (Reporter Wu Xiaolu).