Since this year, a number of listed companies have launched repurchase programs to boost market confidence with real gold and silver. China Securities Journal reporter noted that in addition to the large number and large amount, the sources of repurchase funds of listed companies have been innovative.
Industry insiders believe that with more listed companies participating in repurchase, investor confidence will be further restored, helping the A-share market to stabilize and grow.
centralized issuance of repurchase plan
As the A-shares continued to fluctuate, listed companies launched repurchase plans one after another. Take the Shanghai stock market as an example. Since March, there have been 30 companies newly issuing repurchase plans in the Shanghai stock market, and the total repurchase amount is expected to be 9.671 billion yuan. Among them, there are 20 mainboards, with an estimated repurchase amount of 8.542 billion yuan; There are 10 scientific innovation boards, with an estimated repurchase amount of 1.13 billion yuan. Meanwhile, 77 companies in Shanghai stock market disclosed the announcement of repurchase progress, which showed that the actual repurchase amount of Listed Companies in Shanghai stock market reached 12.8 billion yuan recently.
It is worth mentioning that some listed companies that recently issued repurchase announcements are "old faces". For example, on the evening of March 9, the Shanghai listed company Hengli Petrochemical Co.Ltd(600346) announced that it planned to repurchase shares with 1 billion yuan to 1.5 billion yuan, which was the fourth repurchase since the company was listed. On March 11, Hengli Petrochemical Co.Ltd(600346) quickly implemented the first action of phase IV repurchase, involving 8.1454 million shares and paying about 172 million yuan.
From the announcement, we can roughly sum up two major motives for listed companies to implement Share Repurchase: one is based on their confidence in the future development prospects of the company, and to enhance investors' confidence in the company; Second, it is used for the subsequent implementation of equity incentive or employee stock ownership plan to fully mobilize the work enthusiasm of middle and senior managers and core backbone personnel of the company.
In addition to the large quantity and large amount, the sources of repurchase funds of Shanghai stock exchange companies have been innovated.
On the evening of March 17, China Molybdenum Co.Ltd(603993) , Polaris Bay Group Co.Ltd(600155) , Shanying International Holdings Co.Ltd(600567) , Southern Publishing And Media Co.Ltd(601900) , Southern Publishing And Media Co.Ltd(601900) unanimously launched the "bond issuance type" repurchase plan to repurchase the company's shares by issuing corporate bonds.
Generally, the capital source of share repurchases by listed companies is mostly their own funds, but the funds raised by listed companies by issuing preferred shares and bonds can also be used for share repurchases. Market observers believe that the interest rate of bonds issued by listed companies through the Shanghai stock exchange platform is lower than the average level of the market, which can reduce the cost of the company. In addition, the company's stock price seems to be undervalued by the way of "real interest" and "real interest", which plays a certain role in the development of listed companies.
the deregulation of rules triggered a wave of repurchase
The rise of repurchase of listed companies began in 2018. In the fourth quarter of that year, the deregulation of the repurchase policy gradually released the repurchase enthusiasm of listed companies.
According to the data, from 2018 to 2021, the number of Companies in Shanghai stock market that disclosed the repurchase plan was 159, 123, 92 and 158 respectively, and the actual repurchase amount was 20.3 billion yuan, 41 billion yuan, 30.1 billion yuan and 41.4 billion yuan respectively.
In October 2018, the Standing Committee of the National People's Congress deliberated and adopted the decision of the Standing Committee of the National People's Congress on Amending the company law of the people's Republic of China, which made special amendments to the provisions of Article 142 of the company law on the company's share repurchase system, added new situations in which share repurchase can be implemented, simplified the repurchase procedures and arrangements, and established a treasury share system.
The reporter of China Securities Journal noted that within two days after the issuance and implementation of the revised decision, 30 listed companies in Shanghai stock market disclosed announcements related to stock repurchase, of which 14 disclosed stock repurchase proposals or plans, and 16 disclosed the implementation progress of stock repurchase.
In November of the same year, the CSRC, the Ministry of Finance and the SASAC issued the opinions on supporting listed companies to repurchase shares. The opinion has three highlights: first, it basically defines the "protection type" repurchase standard; second, it "loosens" the repurchase of financial listed companies; third, it provides "preferential" conditions for refinancing after repurchase.
In order to implement the revised decision and improve the stock repurchase system, the Shanghai and Shenzhen Stock Exchange issued detailed rules for the implementation of stock repurchase in January 2019, which "paved the way" for listed companies to implement stock repurchase more flexibly and conveniently by increasing the situation of stock repurchase, broadening the source of repurchase funds and appropriately simplifying the implementation procedures.
The introduction of relevant policies has prompted a wave of repurchase of listed companies. Statistics show that in 2018, 159 companies in Shanghai Stock Market issued 169 stock repurchase plans, which were 4.3 times and 4.1 times of the sum of the four years from 2014 to 2017 respectively. In 2018, 114 listed companies in Shanghai stock market took the initiative to implement repurchase, and the actual repurchase amount totaled 20.3 billion yuan, four times and 2.6 times of the sum of the four years from 2014 to 2017, respectively. Overall, the enthusiasm of Shanghai A-share listed companies to participate in stock repurchase has increased significantly.
is expected to continue to heat up
Stock repurchase is the behavior of listed companies using cash to buy back a certain amount of shares issued from the market. It is also an important institutional arrangement for companies to manage market value, transmit positive signals and optimize capital structure.
Although the repurchase enthusiasm of A-share listed companies has increased significantly in recent years, there is still a gap with the mature market in terms of promotion, application and function. The volume of A-share repurchase market is still significantly small, and there is a large development space. CSIC Financial Research Institute suggested to further relax the conditions and proportion of stock repurchase, strengthen the supervision of information disclosure and trading behavior, guide and standardize the repurchase behavior of listed companies, do a good job in expectation management, and strengthen the positive publicity and guidance of repurchase of listed companies.
Industry insiders believe that the repurchase action of listed companies will continue next. After the special meeting of the Finance Committee of the State Council was held on March 16, the Party committee of the CSRC quickly held an expanded meeting to convey and study the spirit of the meeting and make research and deployment on the implementation. The CSRC said that listed companies should be encouraged to increase their holdings and repurchase.
According to Shao Yu, chief economist of Orient Securities Company Limited(600958) China Securities Regulatory Commission, the above statement of the CSRC has put forward specific measures to stabilize the market, which helps to enhance investor confidence.
Through stock repurchase, listed companies can convey to investors that the company is full of confidence in the future development prospects, so as to promote the matching of the company's stock market price with its internal value. Market participants said that the stock repurchase system has played a vital role in maintaining the stability of stock prices and is conducive to safeguarding the interests of listed companies and shareholders.
