At the beginning of the new year, 45 A-share companies have offered repurchase plans, and the pharmaceutical industry has become the main force.
The reporter of the economic information daily noted that from the beginning of this year to February 21, 9 pharmaceutical companies in A-Shares have issued repurchase plans, which not only ranks first in the number of industries, but also the overall scale of the upper limit of repurchase funds in the pharmaceutical and biological industry has reached 2.37 billion yuan, which is far higher than that in other industries. Among them, the medical device leader Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) has thrown out a repurchase plan of up to 1 billion yuan.
Why does the pharmaceutical industry intensively release the repurchase plan? After the repurchase plan is thrown out, can it boost the company’s share price?
pharmaceutical enterprises frequently throw repurchase plan
According to the data of Hithink Royalflush Information Network Co.Ltd(300033) Ifind, as of February 21 this year, 45 companies in the A-share market had issued repurchase plans (according to the announcement date of the plan of the board of directors), of which 2 have completed the repurchase, 29 are in the implementation stage and 14 are in the stage of the plan of the board of directors.
From the perspective of industry (according to the classification of shenwanyi industry, the same below), 45 companies throwing out repurchase plans include 9 pharmaceutical and biological companies, 6 electronic companies, 5 power equipment companies, 4 basic chemical companies, 3 building decoration companies, 2 media companies, 2 household electrical appliances companies, 2 computer companies, 2 automobile companies, 2 building materials companies 2 light industry manufacturing companies and 6 companies in other industries.
Not only in quantity, but also in terms of the scale of funds to be repurchased, the pharmaceutical and biological industry is also far superior to other industries. According to the data of Hithink Royalflush Information Network Co.Ltd(300033) Ifind, the overall upper limit of the scale of funds to be repurchased by nine companies in the pharmaceutical and biological industry reached 2.37 billion yuan, ranking first in all industries; Followed by companies in the media, electronics, power equipment, basic chemicals, household appliances, computers, automobiles, building materials and other industries, the overall upper limit of the scale of funds to be repurchased is 1.3 billion yuan, 1.11 billion yuan, 856 million yuan, 520 million yuan, 400 million yuan, 350 million yuan, 269 million yuan and 250 million yuan respectively.
Figure 1 statistical data of companies that have issued A-share repurchase plans since the beginning of the year source: Hithink Royalflush Information Network Co.Ltd(300033) Ifind
Among the nine pharmaceutical and biological companies that put forward the repurchase plan, seven companies have a maximum repurchase capital of more than 100 million yuan (including 100 million yuan), including Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) (300760. SZ), Hangzhou Tigermed Consulting Co.Ltd(300347) (300347. SZ), Cansino Biologics Inc(688185) (688185. SH), Amoy Diagnostics Co.Ltd(300685) (300685. SZ), Touchstone International Medical Science Co.Ltd(688013) (688013. SH), Qingdao Haier Biomedical Co.Ltd(688139) (688139. SH), Dirui Industrial Co.Ltd(300396) (300396. SZ), of which the total repurchase capital of the leading medical device Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) reaches 1 billion yuan, The capital scale is the largest.
Figure 2 statistical data of pharmaceutical and biological companies that have released A-share repurchase plan since the beginning of the year source: Hithink Royalflush Information Network Co.Ltd(300033) Ifind
In addition to frequently throwing out share repurchase plans, at the same time, many pharmaceutical companies are also implementing repurchase operations with “real gold and silver”.
According to the preliminary statistics of Hithink Royalflush Information Network Co.Ltd(300033) Ifind data, 223 A-share companies have implemented share repurchases this year, among which 31 pharmaceutical and biological companies rank first in various industries, followed by electronics, mechanical equipment, computer, basic chemical industry, power equipment and other industries. The number of companies implementing share repurchases is 26, 22, 20, 13 and 10 respectively.
Figure 3 statistical data of companies issuing A-share repurchase operation since the beginning of the year source: Hithink Royalflush Information Network Co.Ltd(300033) Ifind
different motives for share repurchase
In less than two months, why did pharmaceutical companies frequently throw out repurchase plans?
In January 2022, the CSRC issued the share repurchase rules of listed companies. Among them, in addition to the reduction of the company’s registered capital, three repurchase applicable situations are added, such as “using shares for employee stock ownership plan or equity incentive”, “using shares for conversion of corporate bonds convertible into shares issued by listed companies” and “necessary for listed companies to maintain the company’s value and shareholders’ rights and interests”.
Some market participants pointed out that the detailed rules appropriately improved the situation of allowing share repurchase, and appropriately simplified the decision-making process of share repurchase, which stimulated the repurchase enthusiasm of listed companies.
Dong Dengxin, director of the Institute of Finance and securities of Wuhan University of science and technology, told the economic information daily that different companies have different repurchase motives, but there are usually two situations, “One is to buy back when the company has no good projects and abundant cash flow, and then carry out fixed increase and other financing activities when the company is poor, which is equivalent to disguised capital operation; the other is that the company believes that the current stock price is seriously undervalued, so from the perspective of stock price, the company is more confident to realize the possible capital in the future by buying back shares Premium. “
Shi lichen, head of Beijing Dingchen pharmaceutical management consulting center, told reporters that the recent intensive repurchase by pharmaceutical enterprises may be caused by comprehensive reasons, “On the one hand, affected by the epidemic and industrial policies in the past two years, the valuation of many pharmaceutical enterprises may have been low. Some of them are very confident in the future development according to their own market conditions, business layout and R & D layout, so they will tend to carry out repurchase; on the other hand, for financing reasons, some enterprises may plan to raise funds in the next step, but due to the excessive stock price at present Low, or cause the financing to fall short of expectations, so we want to boost market confidence through repurchase. “
The reporter of economic information daily noted that since this year, the time for pharmaceutical and biological companies to release the repurchase plan is mainly concentrated in early February. Prior to that, in January, wind data showed that the pharmaceutical biological index (Shenwan) fell 14.94%, the CSI 300 index fell 7.62% in the same period, and the pharmaceutical biological index lost 7.32 percentage points to the CSI 300 index. At the same time, the decline in that month was the highest since 2016.
At the same time, in terms of valuation, the valuation of pharmaceutical and biological (Shenwan) sector in January this year has reached the low point of nearly a decade. In particular, the premium rate of the pharmaceutical sector relative to the CSI 300 decreased from 350% in 2020 to around 130% at the end of January 2022.
Figure 4 changes in valuation level and valuation premium rate of pharmaceutical sector from 2012 to January 31, 2022
(the left axis shows the valuation and the right axis shows the premium rate) picture source: China Industrial Securities Co.Ltd(601377) Institute of economics and Finance
reserve sector pressure after oversold
Dong Dengxin believes that the recent downturn in the pharmaceutical sector may be related to the gap in investor expectations.
\u3000\u3000 “In fact, at the beginning of the epidemic, some investors blindly followed the trend of speculation in the whole pharmaceutical sector. However, as the epidemic is gradually controlled, the performance of some companies will come to the bottom. Relatively speaking, it does not have the high growth expected by everyone, or there is no great improvement with the development of the epidemic. In this case, it may lead to the stock market Price shuffle. Of course, there is also a trend of sector speculation in the general decline of the pharmaceutical sector. For example, some investors chase after the rise and kill the fall, throw more and more, and so on.
”
Hongta Securities Co.Ltd(601236) believes that such a unilateral market in the pharmaceutical and biological industry is mainly due to the excessive increase in the early sector driven by the epidemic and medical reform. At the same time, with the introduction of a series of policies at the end of 2021, the centralized purchase of some IVD, equipment consumables and non Medicare listed drugs broke the expectation of price reduction brought by the previous centralized purchase in the market. Therefore, the future performance of some pharmaceutical enterprises is very uncertain.
Take “northeast yaomao” Changchun High And New Technology Industries (Group) Inc(000661) (000661. SZ) as an example. On January 19, Guangdong Provincial Drug Trading Center issued the document on centralized procurement of diclofenac and other drugs of Guangdong alliance. Due to the inclusion of growth hormone in the centralized procurement of Guangdong alliance, the market is worried that the performance space of Changchun High And New Technology Industries (Group) Inc(000661) will be squeezed. Affected by this, Changchun High And New Technology Industries (Group) Inc(000661) fell by the limit for three consecutive days. In just six trading days from January 19 to January 26, Changchun High And New Technology Industries (Group) Inc(000661) fell 36.99%, the industry fell 12.02% in the same period, and the Shenzhen composite index fell 4.25%.
In the face of the sharp decline of share price, Changchun High And New Technology Industries (Group) Inc(000661) played a combination of “repurchase + overweight”. On January 21, Changchun High And New Technology Industries (Group) Inc(000661) disclosed the repurchase results: from December 3, 2021 to January 21, 2022, the Company repurchased 2473200 shares in total, with a total transaction amount of about 600 million yuan (including transaction costs). On the same day, Changchun High And New Technology Industries (Group) Inc(000661) announced that nine directors and supervisors, including Ma Ji, chairman of the company, and Jiang Yuntao, director and general manager, increased their holdings of the company’s shares on the same day, with a total of 84700 shares.
In addition to Changchun High And New Technology Industries (Group) Inc(000661) , China’s clinical cro leader Hangzhou Tigermed Consulting Co.Ltd(300347) also faces great pressure to protect the disc. The reporter of economic information daily noted that the recent stock price trend of Hangzhou Tigermed Consulting Co.Ltd(300347) was low. From the beginning of the year to February 11, Hangzhou Tigermed Consulting Co.Ltd(300347) share price fell by 24.53%, the industry fell by 17.74% in the same period, and the Shenzhen composite index fell by 10.29%.
On February 13, Hangzhou Tigermed Consulting Co.Ltd(300347) announced that it plans to use its own funds or self raised funds to repurchase some A-share shares of the company in the form of centralized bidding transaction for the later implementation of A-share incentive plan or A-share employee stock ownership plan. The repurchase funds are 250 million yuan to 500 million yuan, and the repurchase price is no more than 120 yuan / share.
In August 2021, Hangzhou Tigermed Consulting Co.Ltd(300347) also threw out a repurchase plan, and its repurchase fund was as high as 250 million yuan to 500 million yuan at that time. In this regard, industry insiders said that the repurchase plan was issued twice within half a year, and the repurchase fund scale is large, indicating that the company is under great pressure to protect the market at present.
The person further said that compared with the highest point of the company’s share price on July 1 last year, the current Hangzhou Tigermed Consulting Co.Ltd(300347) share price has been “halved”. However, this is not due to poor performance, but due to the overall downturn of the pharmaceutical industry and the decline of funds. Because before, the fund focused on the cro industry, and the valuation of the sector was relatively high.
the stock price boost effect may not be obvious
In the history of a shares, the repurchase cases of pharmaceutical companies are not uncommon. Especially in recent years, there has been a “blowout” in the repurchase of pharmaceutical and biological companies.
According to the preliminary statistics of Hithink Royalflush Information Network Co.Ltd(300033) Ifind data, from 2012 to 2017, the number of Companies in the pharmaceutical and biological industry issuing repurchase plans remained within 10, while from 2018 to 2021, the number of Companies in the pharmaceutical and biological industry issuing repurchase plans soared, successively 59, 27, 25 and 52.
Figure 5 statistical data of pharmaceutical and biological companies issuing repurchase plans for A-Shares in recent ten years source: Hithink Royalflush Information Network Co.Ltd(300033) Ifind
Taking 2018, the year with the largest number of companies issuing repurchase plans in the pharmaceutical and biological industry, as an example, the reporter of the economic information daily noted that more than 1 / 4 of the 59 pharmaceutical and biological companies that offered repurchase plans were concentrated in November. According to wind data, in the second half of 2018, the pharmaceutical biological index (Shenwan) fell by 29.85%, while in the overall downward market in the second half of 2018, in November 2018, the pharmaceutical biological index (Shenwan) rose by 5.3%, outperforming the CSI 300 index, which rose slightly by 0.6% in the same period by 4.7 percentage points.
However, several experts said that the sale of the repurchase plan would not necessarily boost the company’s share price. Dong Dengxin frankly said, “In fact, Chinese listed companies do not pay much attention to market value management, because most companies believe that the stock price is not directly related to employee welfare and executive compensation. At present, options or equity incentives are not tied to the market value, and more attention is paid to performance indicators such as profit and revenue. In addition, A-share investors are mainly retail investors, mainly short-term speculation to make fast money, and are not inclined to For long-term investment. Therefore, I think it is unlikely to consider repurchase from the perspective of market value management in China. “
Shi lichen also believes that the company’s release of repurchase plan may not boost the stock price. “In fact, the repurchase process of listed companies is divided into several steps, and the release of the plan is only one of them. There are still many variables whether it is really implemented in the end. The key to the long-term trend of the stock price of pharmaceutical enterprises lies in whether the company’s core competitiveness is outstanding, which is specifically reflected in whether the company’s performance is excellent, whether the future development plan is clear, whether the company’s R & D ability is excellent and whether the business adjustment ability is good Whether it is strong or not. ” He said.
In addition, Shi lichen also pointed out that for the recent intensive repurchase plan thrown out by the pharmaceutical industry, investors should be cautious and deeply study the basic market of the company. In fact, a simple repurchase signal is not of practical significance, which needs to be comprehensively considered in combination with the company’s future business adjustment or R & D layout trend.
