On March 29, Memsensing Microsystems (Suzhou China) Co.Ltd(688286) announced that the Company repurchased 200 shares of the company for the first time through centralized bidding through the trading system of Shanghai Stock Exchange on March 28, with a transaction price of 61 yuan / share and an amount of 12000 yuan. Although this transaction does not violate any rules, as the first implementation of the repurchase scheme, it is a bit ridiculous to buy only two hands.
In addition to the mini transaction of Memsensing Microsystems (Suzhou China) Co.Ltd(688286) and the mini repo scheme of RMB 1.22 million to 2.44 million launched by Henan Tong-Da Cable Co.Ltd(002560) . These ironic repurchases are hard not to doubt that they are follow-up with the nature of deception, just to meet the recent recommendation of the financial commission of the State Council to encourage listed companies to increase their holdings of repurchases.
Of course, compared with this painless repurchase, there are many cases where the repurchase program of hundreds of millions of yuan is often launched but hastily terminated, and even companies that have not completed the lower limit of the repurchase plan. For example, Sundy Land Investment Co.Ltd(600077) , the company offered a repurchase plan in January last year and planned to repurchase 130 million yuan to 260 million yuan. However, as of the expiration of the repurchase in late January this year, a total of 7.9998 million yuan has been completed, only reaching 6.15% of the lower limit of the repurchase plan, which is far from the repurchase plan.
Under the circumstances of weakening market conditions, pressure on macroeconomic growth and various “black swan” events, share repurchase is one of the effective means for listed companies to manage the market value. Since the implementation of the first share repurchase of A-Shares in 2008, the number of listed companies announcing share repurchase has increased year by year, especially in extreme market.
On the one hand, repurchase can enhance the confidence of investors and employees. The stock repurchase price can be regarded as the core stock repurchase price to some extent; On the other hand, repurchase is also a means of equity management, which can effectively prevent hostile takeover.
Obviously, the above-mentioned repurchase disorder violates the original intention of the repurchase plan. The motivation behind the voluntary “dishonesty” of listed companies is to take the opportunity to hype the stock price and pave the way for the subsequent reduction and cash out, equity pledge or other capital operation. When the term of the repurchase scheme expires, an apology announcement will be issued or a regulatory warning letter will be received, even if the matter is settled.
In this regard, the author agrees with the suggestions of some experts that listed companies that fail to complete the repurchase plan can be punished according to the seriousness of the circumstances. If the repurchase ratio is low or the lower limit of the scheme is not reached, the company may be punished as false statement, and the senior executives shall be recorded in the integrity file. At the same time, the listed company shall be ordered to forcibly repurchase a certain proportion, and the repurchase plan shall not be launched again within a certain period of time.
In addition to strengthening supervision, small and medium-sized investors should cultivate the ability to actively identify risks, rationally view the motivation behind share repurchase, and reduce or avoid participating in short-term speculation.
First of all, investors should establish the concept of long-term value investment and carefully study the fundamentals of the company, especially the financial data. If a company’s cash flow has problems, or the operating data has declined continuously, and the listed company has launched a large-scale repurchase program, it may be suspected of selling dog meat with sheep’s head. Secondly, it is necessary to continuously track the progress and remaining period of the repurchase plan. If the plan is nearing the end and a large number of shares are still not repurchased, the probability of default is high. Finally, check the historical repurchase, employee stock ownership plan, equity incentive and other records of listed companies. Past trustworthiness and performance are also one of the important judgment criteria.
