On April 11, the CSRC, SASAC and the all China Federation of industry and Commerce jointly issued a notice on further supporting the healthy development of listed companies, proposing 12 practical measures to support the development of listed companies and maintain the stability of the capital market. It is mentioned that listed companies are supported by law to raise funds through issuing preferred shares, bonds and other channels to implement share repurchase, encourage major shareholders and directors, supervisors and senior executives to hold shares of listed companies for a long time, and actively stabilize the stock price by increasing their holdings of shares when the company’s shares fall sharply.
Looking at the trend from the data: since this year, the amount and number of A-share repurchases have increased significantly, among which the repurchases of home appliances, real estate, media and other industries are strongly willing; The number of listed companies that issued share increase plans in the same period decreased by more than 20% compared with the same period last year. Another notable feature is that private enterprises are at the forefront of this wave of boosting confidence, with the proportion of launching repurchase and shareholding increase plans reaching 80% and 64% respectively.
Explore the reasons through the trend: on the one hand, the main body of repurchase is listed companies, while the main body of increase in holdings is important shareholders or directors and supervisors of the company. There are some differences between the two in capital capacity, operating cost and direct impact on stock price; On the other hand, “the major shareholders of private enterprises suffer most from the sharp fluctuation of the stock market”. Some market participants explained the more positive attitude of private enterprises in the “self rescue action”.
Interestingly, among the “old methods” to boost confidence, there are also “new explorations” in the source of funds. Recently, a number of science and Innovation Board companies have “tasted the fresh” and used over raised funds to repurchase the company’s shares. The mode of “over raised repurchase + equity incentive” has become a new trend of science and innovation board. In addition, there are more and more cases of raising funds through bond issuance to buy back shares. On 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) . This kind of repurchase seems to use financial leverage and pay a certain cost, but it plays a role in releasing the value of the company.
repurchase plan “volume and price rise”
Statistics show that A-Shares this year, whether the number of companies issuing plans, the upper limit of the expected repurchase amount, or the number and amount of repurchases, have achieved significant growth year-on-year and month on month.
As of April 11, 163 listed companies have disclosed repurchase plans in 2022, with a significant increase of 91.76% month on month and a slight increase of 0.62% year-on-year; The maximum repurchase amount calculated by the upper limit of repurchase price has reached 51.78 billion yuan this year, an increase of 106.43% month on month.
From the data of repurchase that has been implemented, the cumulative repurchase amount since this year is 52.635 billion yuan, a year-on-year increase of 39.16%.
From the perspective of the purpose of share repurchase, it is mainly used to implement equity incentive or employee stock ownership plan, accounting for nearly 60%. Only 10 companies cancelled after share repurchase. This also fully reflects the new changes in the reform of the repurchase system. Before the reform, the shares repurchased could only be cancelled and could not be used for other purposes.
In terms of industry, 163 listed companies that have disclosed repurchase plans are mainly distributed in electronics, medicine and biology, computer, basic chemical industry, power equipment and other industries. Household appliances, real estate, media, transportation and other industries are expected to have a month on month increase of more than 10 times the upper limit of repurchase amount.
Among them, the upper limit of the proposed repurchase amount of 13 companies exceeds 1 billion yuan. For example, Midea Group Co.Ltd(000333) and Haier Smart Home Co.Ltd(600690) are expected to have a maximum repurchase amount of 5 billion yuan and 3 billion yuan respectively, ranking the top two China Vanke Co.Ltd(000002) , Rongsheng Petro Chemical Co.Ltd(002493) , Han’S Laser Technology Industry Group Co.Ltd(002008) proposed repurchase amount exceeds 2 billion yuan.
It is worth mentioning that cash rich banks and coal companies are rare to buy back this year.
In terms of the amount of repurchase that has been implemented this year, steel, building decoration and household appliances have the largest repurchase efforts, reaching 7.199 billion yuan, 5.826 billion yuan and 4.704 billion yuan respectively.
shareholding increase plan decreased by 20%
In sharp contrast to the vigorous launch of repurchase, the enthusiasm of shareholders of listed companies to choose to increase their holdings is obviously cold.
As of April 11, a total of 84 listed companies had disclosed their plans to increase their shareholders’ holdings this year, down 24.32% from the same period last year; The number of companies that have implemented the increase, the number of shares and the amount of increase decreased by 33.18%, 43.04% and 22.15% respectively compared with the same period last year.
In terms of industry distribution, the enthusiasm for increasing holdings of mechanical equipment, medicine and biology, building materials, agriculture, forestry, animal husbandry and fishery is relatively higher. Among them, the shareholding increase plans launched by building materials and agriculture, forestry, animal husbandry and fishery this year increased by 5 year-on-year.
In terms of the increased holdings, the increased holdings of the six major industries exceeded 1 billion yuan, of which pharmaceutical and biological, communication and power equipment ranked among the top three, with the amounts of 6.17 billion yuan, 4.102 billion yuan and 1.954 billion yuan respectively.
In the “contradiction” between good performance and low share price, the shareholders of pharmaceutical and biological listed companies have begun to actively increase their holdings in the secondary market recently. For example, Jafron Biomedical Co.Ltd(300529) director Wang Jianfan increased his holdings by 201 million yuan this year, and Bgi Genomics Co.Ltd(300676) director Wang Jianhe and controlling shareholder increased their holdings by 387 million yuan.
private enterprises assume the “main force of confidence”
Private enterprises, where the personal wealth of major shareholders is closely related to the company’s share price, are often more sensitive to market fluctuations, and “self rescue action” is also more active, which is the “main wave” of “repurchase and holdings increase”.
According to the data, a total of 130 private enterprises issued repurchase plans for A-Shares this year, accounting for 80%; 53 private enterprises disclosed plans to increase their holdings, accounting for 64%; The total holdings of private enterprises increased by 12.836 billion yuan, accounting for 50% of the total holdings this year.
In contrast, only five local state-owned enterprises and central enterprises “sell” to buy back; This year, the total holdings increased by 8.723 billion yuan, accounting for 34%, 16 percentage points lower than that of private enterprises.
Although there are few actors, the “hands” of state-owned enterprises are rich. These state-owned enterprises demonstrate their responsibility and responsibility.
For example, China Telecom Corporation Limited(601728) , which invested 2.5 billion yuan to increase its holdings, and China Mobile, which increased its holdings by 1.5 billion yuan, are among the “top ten overweight kings” of a shares.
In addition, Southern Publishing And Media Co.Ltd(601900) 3 announced on March 17 that it plans to use its own funds and corporate bond funds to repurchase shares by means of centralized bidding transaction, with a total repurchase amount of no less than 80 million yuan and no more than 160 million yuan.
Nanjing Tanker Corporation(601975) also announced recently that it plans to buy back shares to be cancelled and reduce the registered capital. The repurchase amount is no less than 50 million yuan and no more than 100 million yuan.
innovation in the repurchase of Kechuang board
On April 12, the company Ropeok Technology Group Co.Ltd(688619) announced that it planned to buy back the company’s shares from 15 million yuan to 30 million yuan, which will be used for employee equity incentive at an appropriate time in the future.
The source of this repurchase fund is clearly marked as “initial over raised funds (including interest income) and over raised funds after permanent replenishment”.
Using over raised funds to carry out share repurchase is becoming a new path for the science and innovation board to open up the source of repurchase funds. At present, the first mock exam board of 6 companies, Appotronics Corporation Limited(688007) , Hangzhou Arcvideo Technology Co.Ltd(688039) , and so on, “test the water”. Among them, Sansure Biotech Inc(688289) tasted the “first soup” with the over raised funds of 60 million yuan to 120 million yuan to be used for repurchase.
At the beginning of January this year, in order to optimize the self-regulation rule system of listed companies and standardize the share repurchase behavior of listed companies, the Shanghai Stock Exchange revised and issued the self-regulation guidelines for listed companies of Shanghai Stock Exchange No. 7 – share repurchase, allowing the over raised funds to be used for share repurchase. This has also become the “legal basis” of this new model.
From the perspective of the purpose of share repurchase, the combination of “over raised repurchase + equity incentive” may better promote the long-term development of science and innovation companies. The first mock exam to reporters said that this model, which has little impact on the debt repayment ability of the company, is the key to the core research and development talents, which is conducive to boosting market confidence.
Then focus on the overall repurchase situation of the science and Innovation Board: since this year, 21 science and innovation companies, including Cansino Biologics Inc(688185) , Qingdao Haier Biomedical Co.Ltd(688139) and others, have successively disclosed share repurchase plans and implemented them successively, with a maximum total amount of 2.21 billion yuan Nine companies, including Suzhou Tztek Technology Co.Ltd(688003) , Traffic Control Technology Co.Ltd(688015) and others, issued plans to increase their holdings, with a total increase of up to 290 million yuan.
The positive signals released by the repurchase and increase of holdings reflect each other with the performance fundamentals of the steady growth of listed companies. According to the performance express, the overall performance of the science and Innovation Board showed a high growth trend in 2021, with a total operating revenue of RMB 818434 billion, a year-on-year increase of 36%; The net profit attributable to the parent company was 93.682 billion yuan, a year-on-year increase of 71%.
Taking Qingdao Haier Biomedical Co.Ltd(688139) as an example, the company’s revenue in 2021 was 2.126 billion yuan, a year-on-year increase of 52%; The net profit attributable to the parent company was 818 million yuan, a year-on-year increase of 115%. The Company repurchased the company’s shares with its own funds ranging from 50 million yuan to 100 million yuan. As of February 28, the company has repurchased 680000 shares and paid a total of 498546 million yuan. The company also released the plan for the concerted action of the actual controller to increase its shareholding, with a cumulative increase of RMB 100million to RMB 200million.
Experts say that it is important to carefully consider the company’s long-term development and profitability from the perspective of the company’s financial holding and repurchase, as well as the internal development of the company’s long-term profitability. The increase of share repurchase will also play a positive role in stabilizing the stock price and improving the enterprise value, and enable investors to better share the company’s growth dividend.
