On February 6, the Shanghai Composite Index closed at 278949 points, up 323%, and once stood above 2800 points during the session. Shenzhen Cheng, GEM, and Science and Technology Innovation Board have also been **.
The opening of A-shares is inseparable from the frequent moves of the China Securities Regulatory Commission. From shouting and severely punishing market manipulation to malicious short-selling, to expanding the scope of exchange-traded open-end index (ETF) holdings, the CSRC said that it "encourages and supports listed companies to increase buybacks and holdings".
In fact, listed companies have begun to "buy" themselves in a big way. Wind data shows that from January 1 to February 5, 864 A-share listed companies have given back to investors by repurchasing shares.
From the perspective of implementation progress, 731 companies have implemented or completed repurchases, involving a repurchase amount of 627$9.6 billion; According to the research report of SPDB International, A-share repurchases have accelerated since the beginning of this year, with the repurchase amount increasing by 133% month-on-month in January.
The buyback wave of the new year, which boosted confidence, has come.
Figure Worm Creative.
The faucet moves
In this intensive expansion of the repurchase boom, the leading companies' large-scale repurchase actions have become the highlight.
For example, WuXi AppTec, the CXO leader in the pharmaceutical field. On February 2, WuXi AppTec announced a plan to repurchase the Company's A-shares through centralized bidding, with a repurchase scale of approximately RMB1 billion.
WuXi AppTec's reason for the repurchase was to "safeguard the company's value and shareholders' equity", and the company chose to cancel the repurchase. Only one trading day later, on February 5, the company announced the first implementation of the repurchase of the company's shares, using a total of 1 billion yuan, "the repurchase of shares has been implemented".
Another example is SF Holdings, a leading express delivery company. On January 31, SF Holdings announced that it planned to spend 500 million yuan to 1 billion yuan to repurchase the company's shares. On February 1, the company spent about 13.2 billion yuan completed the first repurchase. As for the reason for the repurchase, SF Holding pointed out that based on its confidence in the future development prospects and high recognition of its own value, it will repurchase part of the company's shares for employee incentives.
Not only WuXi AppTec and SF Holdings, but only on February 5, LONGi Green Energy, a leading CPU leader, and Sany Heavy Industry, a leading construction machinery company, both of which are 100 billion giants, issued repurchase announcements, with the lower limit of the repurchase amount exceeding 300 million yuan.
Bosera believes that the repurchase tide is often when the market is at a relatively low level, and the repurchase of the A** field has the characteristics of "counter-cyclical", and it is often concentrated on repurchase when the market is lower. The purpose of repurchase by listed companies includes stabilizing stock prices, highlighting value, equity incentives and centralized control.
Guo Shiliang, an expert and financial commentator at the whale platform think tank, further told China News Weekly that listed companies adopt a buyback strategy in the bottom area, on the one hand, to stabilize the stock price and enhance the company's image, and on the other hand, it is for the sake of "protecting the disk".
At a time when market sentiment is low, the confidence boost brought by buybacks is particularly important. WuXi AppTec has recently fallen into a predicament and its stock price has suffered a heavy fall, and it has issued clarification announcements one after another; SF Holdings is also facing market anxiety at the moment, and its stock price is at a one-year low.
In addition, the unified buyback with the "investor-oriented" development concept as the motivation has also attracted attention. Since the evening of January 30, a number of listed companies have taken the repurchase plan as the fulcrum and successively issued action plans for "improving quality, efficiency and return".
Since the beginning of the year, as of February 5, more than 130 listed companies such as Haitong**, State Investment Capital, Shanshan Co., Ltd., Shuijingfang, Hymsing, Hewang Electric, and Yifei Laser have disclosed relevant announcements on the action plan of "improving quality and efficiency and emphasizing returns", and launched a repurchase plan.
It is worth noting that many companies' repurchase plans are proposed by the chairman or actual controller. On February 4, Sany Renewable Energy disclosed that it proposed to increase the repurchase amount, which was originally not less than 100 million yuan and not more than 200 million yuan, to 300 million yuan to 500 million yuan, which was proposed by Chairman Zhou Fugui.
Under the leading effect, the actual controller or the company's executives are also vying to become the main body of the increase. Since the beginning of the year, a number of listed companies such as Tuopu Group, Xinbang Pharmaceutical, Dabeinong, Guanglian Airlines, Qinghai Huading, and Weide Information have issued announcements on shareholders to increase their holdings or plan to increase their holdings.
In this regard, Tian Lihui, dean of the Institute of Financial Development of Nankai University, analyzed to China News Weekly that in the current market environment, corporate buybacks are generally based on the response to policy calls, market value management measures and strategic development considerations.
Not only in response to policy requirements, but also in their own interests, many companies vigorously promote buybacks to boost confidence at the node where the market value is too low. At the same time, buybacks may also help companies achieve strategic goals, such as improving operational efficiency and strengthening market position. ”
Changes and highlights
According to the statistics of the China Association of Listed Companies, from 2022 to 2023, 1,836 listed companies have announced a total of 3,484 repurchase plans and repurchased 178 shares4.2 billion shares, with a repurchase amount of 1821$8.9 billion.
The purpose of the repurchase is mainly divided into two aspects: the construction of incentive mechanism and the management of market value. The total number of shares repurchased for the purpose of implementing equity incentives or employee stock ownership plans is 762.4 billion shares, accounting for 6217%, the repurchase amount is 10879.8 billion yuan, accounting for 6532%；Buybacks for market value management purposes195.4 billion shares, accounting for 1593%, the repurchase amount is 1733.7 billion yuan, accounting for 1041%。
Compared with the past, the centralized repurchase that has occurred since the beginning of 2024 has two major characteristics: the number of repurchase cases for the purpose of cancellation has increased, and the second repurchase has become a common practice.
What is a write-off repo?
Yu Fenghui, a specially invited researcher at China's financial think tank, told China News Weekly that the write-off repurchase refers to the fact that after the listed company buys its own company in the open market, it will no longer be used as treasury shares or for future equity incentive plans, but choose to cancel directly, "due to the reduction of total share capital, the company's net profit is allocated to the share base of the corresponding reduction, which can theoretically increase the level of earnings per share, which may push up the stock price." ”
Not only WuXi AppTec, which completed the cancellation repurchase in the "lightning" above, but also plans to cancel the repurchase in the near future, as well as many companies such as Sunwoda, Chenguang Biotechnology, Livzon Group, Antu Biotechnology, Yangyuan Beverage, and West Point Pharmaceutical.
Tian Lihui analysis believes that the real gold ** cancellation repurchase brings a more positive signal, large-scale cancellation repurchase often shows the confidence of enterprises to respond to changes and challenges in the market environment, "cancellation repurchase can improve the financial performance of enterprises, optimize the capital structure, enhance market competitiveness, etc.; It can also boost market confidence, guide market expectations, and improve investor structure. ”
The second repurchase has also become an important phenomenon in this repurchase tide.
On the basis of the repurchase plan that has been implemented in the early stage, Juewei Food, Enjie Shares, Xinwangda, Changchun High-tech, Lingyunguang and other companies have once again thrown out the repurchase plan to complete the confidence increase.
Taking Juewei Food as an example, on February 4, the company issued a repurchase plan, planning to repurchase shares with its own funds of 200 million yuan to 300 million yuan. On January 31, Juewei Food had just completed the previous round of repurchase, costing 300 million yuan. You must know that the net profit attributable to the parent company of Juewei Food in 2022 will be about 23.3 billion yuan, once again a large amount of repurchase, the determination can be seen.
The second repurchase may be an increase in disk protection, and it is also a kind of sincerity to the market. The high frequency of repurchase and the large amount of repurchase are effective ways for listed companies to stabilize their stock prices. Self-owned funds, repurchase cancellation, and increased repurchase are good ways to stabilize the stock price. Guo Shiliang commented.
The repurchase of real gold ** will indeed have a certain effect. Taking Gree Electric Appliances, a leading household appliance company, as an example, on October 31, 2023, the company announced that it would repurchase 1.5 billion to 3 billion yuan of ** with its own funds. In just 2 months, on December 29, Gree Electric announced that it had implemented a repurchase of 3 billion yuan.
The huge and fast repurchase also supported the stock price to a certain extent. On February 5, Gree Electric's share price hit a new high in nearly 3 months.
More standardized, more practical
It is worth noting that the issuance of repurchase plans by listed companies is not always good, and needs to be analyzed in combination with the actual situation. After all, the damage caused by "flickering" buybacks should not be overlooked.
Taking Hezong Technology as an example, the company has said that it will start implementing a share repurchase plan from November 10, 2022, and intends to repurchase the company's shares with a total amount of not less than 20 million yuan and no more than 40 million yuan within 12 months. But only thunder did not rain, and the company "did not buy a share" for a year.
For such manifestations of infringing on the legitimate rights and interests of investors, the China Securities Regulatory Commission (CSRC) launched a thunderous attack and filed an investigation against Hezong Technology on December 3, 2023.
Guo Shiliang reminded investors that investors should identify the repurchase intention of listed companies, "If the company adopts debt repurchase, and the cash flow and financial status are not healthy, it is necessary to observe and determine whether there is a risk of pledge liquidation or other unknown risks, and also be wary of listed companies using repurchase rules to buy low and sell high to make the difference." ”
Fortunately, from a regulatory perspective, the repurchase rules of listed companies are evolving in a more standardized and practical direction. On December 15, 2023, the "Rules for Share Repurchase of Listed Companies" was revised and released. The New Repurchase Regulations have made more detailed and clear provisions on improving the convenience of repurchase, strengthening the repurchase constraint mechanism, regulating the purpose and use of repurchase, and adjusting the trigger conditions for repurchase.
The new repurchase regulations are conducive to the establishment of a long-term and stable capital market environment", Yu Fenghui commented, the regulator aims to promote listed companies to carry out share repurchases more reasonably, efficiently and transparently, encourage listed companies to carry out more cancellation repurchases, prevent the abuse of repurchase means to damage the rights and interests of small and medium-sized shareholders, and encourage enterprises to take effective action when the stock price significantly deviates from the intrinsic value, so as to stabilize market expectations and company value.
In fact, buybacks, as a tool to boost confidence, have become the focus of recent market attention.
On January 24, the State-owned Assets Supervision and Administration Commission (SASAC) included market value management in the assessment of the heads of central enterprises, and guided the heads of enterprises to use market-oriented means such as increasing holdings and repurchases in a timely manner to convey confidence and stabilize expectations.
From January 25 to 26, the China Securities Regulatory Commission also proposed in the 2024 system work conference to urge and guide listed companies to strengthen the awareness of returning investors, and more actively carry out repurchase and cancellation and cash dividends.
On February 6, Huijin announced that it had recently expanded the scope of its holdings in exchange-traded open-ended indexes (ETFs), and would continue to increase its holdings and expand the scale of its holdings to resolutely maintain the smooth operation of the capital market.
On the same day, the spokesperson of the China Securities Regulatory Commission said that he "firmly supports" the announcement of the increase in holdings of ** Huijin Company, and will continue to coordinate and guide all kinds of institutional investors to enter the market more vigorously, and encourage and support listed companies to increase their repurchase and increase their holdings.
The China Association of Listed Companies also said that with the continuous improvement of the policy system and the continuous improvement of the importance of repurchase, the active and reasonable use of repurchase tools by listed companies will gradually become normalized in the future.
Note: This article does not constitute any investment advice).
Reference: The wave of A-share buybacks continues, and more than 90 companies make another move, February 5, 2024, Yicai.
Embrace the future! **The company invested 14.3 billion yuan to buy back, and the GEM companies performed enthusiastically, February 4, 2024, China ** News.
Author: Yu Shengmei.
Editor: Yu Yuan.