Repurchase has become a hot word in the current A-share market. The source of funds for listed companies to repurchase shares has also attracted investors’ attention. From this year’s situation, in addition to the common repurchase with self owned funds, the “bond issuance” repurchase and the sudden rise of over raised funds have added new ideas to the repurchase fund pattern of listed companies.
In fact, the securities regulatory authorities do not have too many restrictions on the source of funds for the repurchase of shares by listed companies. The rules on share repurchase of listed companies issued by the CSRC requires that the source of funds used by listed companies for repurchase must be legal and compliant. On the basis of legal compliance, the Shanghai and Shenzhen Stock Exchange will refine the sources of funds and list their own funds, loans from financial institutions and other legal funds, which is undoubtedly conducive to the diversification of sources of repurchase funds.
self owned fund repurchase accounts for a high proportion
According to the data, calculated according to the announcement date, as of April 7 this year, A-share listed companies have issued 292 share repurchase plans. From the perspective of capital sources, there are as many as 279 involving their own funds, accounting for more than 95%.
In this regard, some market participants said that self owned fund repurchase has three advantages: first, it can highlight the abundant cash flow of listed companies and guide the market to pay attention to the long-term value such as the performance of listed companies; Secondly, the process is simple. After the listed company issues the repurchase plan, it can start to implement the repurchase; Finally, the degree of autonomy is high, and the repurchase scale, time and price are relatively controllable.
At present, there are many cases in which leading enterprises buy back with their own funds. For example, S.F.Holding Co.Ltd(002352) 4 announced on April 2 that it had spent 1.287 billion yuan to buy back 24521700 shares S.F.Holding Co.Ltd(002352) relevant people told the reporter of Securities Daily, “this repurchase is a decision based on confidence in the future development of the company and comprehensive consideration of business development, operation and recent performance of the company’s secondary stock market.”
In addition to the repurchase with its own funds, since this year, the forms of “bond issuance” repurchase and over raised fund repurchase of listed companies have also appeared one after another.
Polaris Bay Group Co.Ltd(600155) , China Molybdenum Co.Ltd(603993) and other four companies announced plans to issue bonds for share repurchase. For the “bond issuance” repurchase, cen bin, vice president of the high quality Development Research Institute of Xingong consulting, said that in recent years, policies have supported the repurchase of shares with diversified funds. Listed companies will make a comprehensive judgment based on the market and stock price, the company’s leverage ability, capital use plan and other factors, and will not simply use leveraged funds to repurchase shares.
On April 6, Wuxi Delinhai Environmental Technology Co.Ltd(688069) announced that it planned to repurchase shares with 30 million yuan to 60 million yuan, and the source of repurchase funds was over raised funds. The reporter noted that this is the sixth science and innovation board company to announce its intention to repurchase shares with over raised funds during the year.
“This new source of repurchase funds, on the one hand, comes from the policy encouragement, on the other hand, there is little pressure on the company.” Xu Yang, chief economist of Hong Kong Zhongrui fund, told reporters that most companies on the science and innovation board are in the growth stage, and their own cash flow is often tight, so it is difficult to have a large amount of idle funds for repurchase. With the help of financial instrument repurchase, there is a situation of increasing leverage to improve the company’s debt ratio, so they choose to use the over raised funds for repurchase.
more and more diversified sources of funds
It can be seen that the sources of funds for share repurchases by listed companies are becoming more and more diverse.
Zhang Cuixia, chief investment adviser of Jufeng investment, told reporters that the A-share market, as an emerging market, contains abundant exploration ability. From the practical point of view of repurchase, there are more possibilities. “All legal and compliant funds can be used for repurchase. With the help of low interest loans or share repurchase through other financial instruments, the capital utilization efficiency of listed companies can be improved and investors’ attention can be attracted.”
According to the relevant rules and guidelines issued by the Shanghai and Shenzhen Stock Exchange, the funds that listed companies can use to repurchase shares include their own funds, loans from financial institutions and other legitimate funds. Therefore, the market also has expectations for the specific practice of relevant situations.
Xu Yang said, “there are usually two factors considered in the repurchase of listed companies. One is that the investor sentiment is low when the stock market trend is weak and the fund risk aversion is strong; the other is that the company’s value is undervalued or the attention of investors is low. The strength of the company can be demonstrated through repurchase. Some innovative repurchase methods can further improve the market attention of the company and the activity of investors.”
“Investors pay more attention to whether the listed company has finally completed the repurchase and whether the purpose of the repurchased shares is appropriate.” Dong Dengxin, director of the Institute of Finance and securities of Wuhan University of science and technology, told reporters, “Some companies buy back shares for equity incentive, but the performance of the company itself is general, and the repurchase has little effect on the confidence of investors. The motivation of listed companies to buy back shares needs to be more clear, matched with different sources of repurchase funds, so that investors can see that the company has sufficient funds or low debt ratio and can easily issue bonds, so as to strengthen their confidence in the long-term holding of the company’s shares.”
