A-shares buyback market now shows divergence: share reduction and cancellation occurring simultaneously

How Will the New National Nine Policies Promote the Differentiation of A-Share Buyback Strategies?

Share buybacks, as a means of market value management, have shown a stark polarization in the A-share buyback market this year: on one side, nearly 15 companies have sold previously repurchased shares, relying on "low-price buybacks and high-price reductions" to replenish short-term funds, with some companies achieving impressive returns from their reductions; on the other side, cases of cancellation buybacks are expanding simultaneously, with listed companies actively reducing their capital and solidifying their intrinsic value.

Positive Returns Achieved from Buybacks and Reductions This Year

According to incomplete statistics, more than 10 listed companies, including Huafu Fashion, Aored, and Hongbang Bio, have successively completed reductions of repurchased shares or disclosed progress announcements regarding the reduction of repurchased shares. From the results of these reductions, the operations of the aforementioned companies have all achieved positive returns, with the average reduction prices for Aored, Yongyue Technology, and Tongji Technology generally exceeding the average buyback prices.

On March 17, 2026, Aored (600666.SH) disclosed a progress announcement on cumulative reductions showing that as of March 16, 2026, it had cumulatively reduced 28.408 million shares of previously repurchased shares, with an average reduction price of 3.92 yuan/share and a total transaction amount exceeding 111 million yuan. The company's announcement on the implementation results of the buyback in September 2024 showed that to maintain company value and shareholder rights, it repurchased 35.721 million shares, accounting for 1.29% of the company's total share capital, with a total buyback investment of 50.0255 million yuan, and an average buyback price of only 1.40 yuan/share.

Compared to the average buyback price, Aored's reduction transaction price has significantly increased. Even before reducing all repurchased shares, it has already gained over 50 million yuan, ranking among the top in the current round of reductions of repurchased shares by listed companies. From a performance perspective, Aored expects to turn a profit in 2025, with a projected net profit attributable to shareholders of between 120 million and 160 million yuan, ending years of losses, but the net profit excluding non-recurring items is still expected to be between -185 million and -145 million yuan, with the main business remaining in a loss state.

Yongyue Technology (603879.SH) had cumulatively repurchased 4.8511 million shares from March to May 2024, accounting for 1.35% of the company's total share capital, at an average buyback price of about 3.11 yuan/share. On October 31, 2025, the company announced a reduction plan, and as of February 28, 2026, Yongyue Technology had reduced 2.85 million shares through centralized bidding, accounting for about 0.79% of the company's total share capital, with an average reduction price of about 6.66 yuan/share, totaling approximately 18.973 million yuan. In terms of performance, Yongyue Technology's 2025 annual performance forecast indicates an expected net loss attributable to shareholders of between 33.5 million and 50 million yuan, mainly affected by sluggish sales in the drone business and fluctuations in raw material prices in the chemical sector.

Tongji Technology (600846.SH) cumulatively repurchased about 4.4155 million shares from August to October 2024, accounting for about 0.71% of the company's total share capital, with an average buyback price of 7.01 yuan/share. The company announced its reduction plan on October 22, 2025, and by February 6, 2026, Tongji Technology had reduced all repurchased shares of 4.4155 million shares through centralized bidding, accounting for about 0.71% of the company's total share capital, with an average reduction price of 13.60 yuan/share, totaling approximately 60.05 million yuan.

Fangda Carbon (600516.SH) repurchased about 196 million shares between September 19 and November 4, 2024, accounting for 4.88% of the total share capital, with buyback prices ranging from 3.96 yuan/share to 5.48 yuan/share, spending approximately 100 million yuan to repurchase shares to maintain company value and shareholder rights. In November 2025, the company announced plans to reduce no more than about 75.69 million repurchased shares, accounting for 1.88% of the total share capital, with the proceeds used to supplement working capital. As of February 25, 2026, the company's buyback dedicated securities account had reduced about 40.26 million shares (accounting for 1%), with an average reduction price of 5.983 yuan/share and a total transaction amount of approximately 241 million yuan. The reduction amount ranks among the top in companies that have reduced their buybacks this year, and after the reduction, the company's buyback dedicated securities account still holds 209 million shares (accounting for 5.19%).

Acceleration of Cancellation Buybacks

Although buyback reductions can smooth out extreme fluctuations in company stock prices and maintain the value of listed companies, the practical results of companies "buying low and selling high" often raise market doubts about "buyback protection morphing into an arbitrage tool." In April 2024, the State Council issued the "Opinions on Strengthening Supervision, Preventing Risks, and Promoting High-Quality Development of the Capital Market" (new "National Nine Policies"), elevating the importance of the capital market to a new height. The new "National Nine Policies" clearly state that A-share companies need to focus on market value management, particularly emphasizing the need to "guide listed companies to repurchase shares and then legally cancel them."

Market analysts told reporters: "Cancellation buybacks refer to companies repurchasing shares and then directly canceling them to reduce capital, which directly increases earnings per share (EPS), net assets, and return on equity (ROE), benefiting all shareholders, fundamentally eliminating arbitrage from reductions and idle treasury shares, and returning to the original intention of buyback optimization structures and rewarding shareholders."

Wind data shows that in 2025, 1,495 A-share companies initiated share buybacks, with a cumulative buyback total of 142.736 billion yuan. From an industry distribution perspective, the buyback amounts for industries such as power equipment, electronics, home appliances, and machinery equipment all exceeded 10 billion yuan. According to incomplete statistics, over 40% of buyback plans aim for full or partial cancellation, an increase from 38.33% in 2024. For example, in Midea Group's 10 billion yuan buyback amount, 7 billion yuan will be used for cancellation; Guizhou Moutai's 6 billion yuan buyback will be entirely used for cancellation.

Entering 2026, this trend continues. Wind data shows that as of March 24, 2026, 356 listed companies had repurchased stocks, with a total buyback amount of 18.189 billion yuan.

In light of the accelerating trend of cancellation buybacks, a non-banking financial team from a brokerage in North China pointed out that cancellation buybacks align with the core guidance of the new "National Nine Policies" encouraging long-term value investment. Compared to traditional market value management buybacks and equity incentive buybacks, direct cancellation has a "tax-free dividend" effect, exempting investors from dividend taxes and directly increasing core financial indicators like EPS and ROE, with higher transmission efficiency for valuation repair, especially benefiting industry leaders and central enterprise listed companies with stable cash flows and strong performance certainty.

Another brokerage research report emphasized that the overall valuation of A-shares remains within a reasonable range, and the increase in cancellation buybacks is an important sign of the upgrade in listed company governance. It not only optimizes the share capital structure and avoids long-term idleness of treasury shares and subsequent reduction pressures but also conveys the management's firm confidence in the company's fundamentals to the market, forming a positive cycle of "buyback cancellation—value enhancement—confidence boosting." As policies continue to guide this, regularized cancellations will become a standard action in the capital operations of high-performing companies.

A brokerage strategy team from East China analyzed from the market impact dimension that compliant reductions and buybacks are often driven by short-term cash flow demands of companies, with limited market acceptance, while cancellation buybacks belong to irreversible value enhancement actions, making them easier to attract institutional and long-term funds in the long run. The differentiation between these two types of buybacks will further promote the valuation differentiation in the A-share market, forcing listed companies to abandon short-term arbitrage thinking and return to the essence of long-term value creation.