Intensive action, important signal! Nearly 200 companies have a market value | listed companies | companies

Share repurchase, as a tool to maintain market value, has been frequently adopted by listed companies recently.

According to journalist statistics, as of August 17th, since the start of the mid July reporting period, 191 listed companies have offered repurchase plans, an increase of nearly 25% compared to the same period last year. More than half of these companies will use the planned repurchased stocks for equity incentives.

It is worth noting that companies that offer repurchase plans generally have weaker stock prices in the short term, and repurchase has become one of the main means for these companies to maintain their market value. According to statistics, over 70% of these 191 listed companies have experienced a decline in stock prices since July, with many companies even setting new lows for the year.

Industry insiders have suggested that in this context, it is necessary to be wary of individual listed companies using methods such as repurchase to manage market value and release false signals to the market.

Over 70% of companies have seen a decline in stock prices since July

A-share listed companies have entered the mid reporting period since July. According to WIND data, from July 1st to August 17th, a total of 191 listed companies have announced repurchase plans, compared to 154 in the same period last year. The number of listed companies that have released repurchase plans this year has increased by nearly 25% compared to the same period last year.

Among them, 66 listed companies have launched repurchase plans since August, compared to only 40 last year. It is not difficult to see that the number of listed companies announcing repurchases has increased significantly since August.

Among the 191 listed companies mentioned above, 114 companies explicitly use repurchased shares for equity incentives, while the majority of the remaining listed companies repurchase shares for the purpose of maintaining the stability of their stock prices and protecting the interests of investors.

As is well known, listed companies generally adopt repurchase measures to maintain company value and shareholder rights, especially for undervalued or significantly declining stock prices in the short term.

Journalists have found that among these 191 listed companies, only 54 have seen their stock prices rise since the mid reporting period. That is to say, as many as 137 listed companies have experienced a decline in stock prices since July, accounting for 71.73%. Rising shares experienced the largest decline, reaching 67%, and the company also launched its first repurchase plan on the evening of July 19th.

There are many similar cases. Photovoltaic module giant Jinko Energy's stock price fell nearly 13% during trading on August 15th, closing at 10.42 yuan per share, closing down 11.99%. Its stock price and market value also hit a new low for the year on the same day.

Faced with a sharp drop in stock prices, Jingke Energy urgently released its first repurchase plan since going public that night. The company plans to spend 300-60 million yuan to repurchase shares, with a repurchase price not exceeding 18.85 yuan per share. The repurchased shares will be used for employee stock ownership plans or equity incentives at an appropriate time in the future.

In addition, Weier Group's stock price fell for two consecutive days after the mid year report of "Thunderstorm". On August 15th, Weier shares fell 7.84%. On August 16th, the company's stock price continued to decline by 4.46%. On the evening of the 16th, Weier Group announced its intention to repurchase shares through centralized bidding trading, with a repurchase amount of no less than 500 million yuan and no more than 1 billion yuan, and a repurchase price of no more than 100 yuan per share. The repurchased shares are intended to be used entirely for the subsequent implementation of employee stock ownership plans or equity incentives.

It is worth noting that there are also four companies proposed by shareholders and actual controllers for share repurchase plans, all of which have weak stock prices.

Among them, Gao Fei, Chairman of Aotai Biotechnology, proposed to repurchase shares for RMB 42-60 million. On August 14th, the stock hit a historic low of 48.11 yuan per share during trading, and the company's stock price has dropped by 22% this year.

The chairman of STEM Navigation proposed a buyback of shares for 50-100 million yuan, and the stock price of the company's Xin Xin rose and then fell this year, soaring to 72.63 yuan per share. However, its stock price continued to decline, and on August 16th, the company closed at 42.03 yuan per share, setting a new low for the year.

In addition, Chairman McLaren also proposed to repurchase shares for 20-40 million yuan, and the latest stock price almost wiped out 50% of this year's increase. Since July, the stock price has fallen by 11.67%. The Chairman of Jinghua Micro also proposed to repurchase shares for 15-30 million yuan, and its stock price has reached a new low this year.

Be wary of releasing false signals

In fact, in addition to maintaining the company's market value and shareholder equity, repurchase has three other uses, including: first, reducing registered capital, having market value management, signal transmission, improving per share performance indicators, and reducing financing costs.

Secondly, using shares for employee stock ownership plans or equity incentives: to encourage management to develop appropriate strategies to achieve performance goals while alleviating the company's salary pressure.

Thirdly, using shares to convert convertible corporate bonds issued by listed companies into stocks, convertible bonds have advantages such as lower issuance rates and ease of equity dilution. The financing model of "convertible bonds+repurchase" is beneficial for debt to equity conversion, reducing the difficulty of issuing convertible bonds, and promoting an increase in the proportion of direct financing.

Since the beginning of this year, A-share listed companies have offered 1076 share buyback plans, while in 2022, the number of listed companies offering buyback plans was 1125.

It is not difficult to see that the quantity has increased significantly this year, which is also due to the further relaxation of the repurchase policy. In October 2022, the China Securities Regulatory Commission issued the revised "Rules for Share Repurchase of Listed Companies", which further improved the convenience of share repurchase and increase in listed companies from four main aspects: repurchase conditions, repurchase restrictions for newly listed companies, repurchase window period, and restriction intervals when repurchase and refinancing intersect, giving listed companies greater flexibility and autonomy in repurchase.

At the same time, the Shanghai and Shenzhen Stock Exchanges have also revised the guidelines for share repurchase and share change management, and publicly solicited opinions from the public. The optimization of regulatory systems has become an important source of confidence for listed companies to increase their holdings through share repurchases, stabilizing stock prices and laying the foundation for protecting the interests of small and medium-sized investors.

Guangfa Securities believes that in recent years, regulatory authorities have increased their attention to repurchase, promoting the gradual integration of A-share repurchase rules with major global securities markets, and becoming an important institutional arrangement to maintain the investment value of listed companies and enhance market confidence.

In fact, the Central Political Bureau meeting held on July 24th pointed out the need to activate the capital market and boost investor confidence. Tianfeng Securities also believes that the trend of increasing holdings through repurchase by listed companies is conducive to conveying positive emotions to the market and demonstrating market confidence in economic recovery. Stock repurchase and shareholder increase indicate that the listed company will purchase more stocks from the secondary market to hold on its own, and the increase in holdings of its own stocks indicates that the listed company has a good expectation of its own business prospects.

Secondly, as a market value management behavior, large-scale repurchases have played a certain role in stabilizing stock prices and preventing companies from deviating from their actual value due to the release of positive signals to the secondary market. Positive and benign market value management behavior not only helps to repair and enhance the company's own image, but also helps to protect the interests of existing investors and improve investor sentiment.

However, in the view of a former regulator interviewed by the reporter, in the context of the stock buyback frenzy among listed companies, it is necessary to be wary of individual listed companies in the market, using the name of buybacks to carry out false market value management and release false signals to the market.

He said that both regulators and investors should remain vigilant. On the one hand, they should strengthen their attention and supervision of repurchase and shareholder increase behavior. On the other hand, they should also comprehensively judge the fundamental situation of listed companies and rationally view repurchase behavior when making investment decisions.