Hundred companies plan to launch buyback programs this year, with a proposed expenditure of 52.46 billion yuan.

Securities Daily reporter Gui Xiaosun

According to data statistics from Eastmoney, since the beginning of this year and up to April 7, a total of 100 listed companies have issued share repurchase plan announcements (sorted by the announcement date of the repurchase plans by the board of directors, the same applies below).

Judging from the announcement content, the repurchase period ranges from 3 months to 12 months, showing that different companies maintain market value at their own pace with flexibility. The total amount of funds proposed to be used by the above 100 listed companies is about RMB 52.46 billion (calculated based on the maximum repurchase amount, the same applies below).

Reassurance delivered with real money

Specifically, 12 companies plan to repurchase funds exceeding RMB 1 billion. Among them, Midea Group Co., Ltd. (hereinafter referred to as “Midea Group”) has the highest repurchase amount.

On March 30, Midea Group held the 13th meeting of its fifth session of the board of directors and deliberated and approved the “Plan to Repurchase the Company’s A Shares by Means of Centralized Competitive Trading.” The company agreed to repurchase certain A-share stock issued domestically by the company through centralized competitive trading, to implement an equity incentive plan and/or an employee stock ownership plan. The repurchase amount shall not exceed RMB 13.0 billion and not be less than RMB 6.5 billion, with an implementation period of within 12 months from the date the board of directors approves the share repurchase plan. On March 31, the company repurchased its A shares for the first time through centralized competitive trading via its dedicated securities repurchase account.

In addition, judging from the original intent behind these companies launching their repurchase plans, “returning value to investors” and “conveying confidence in long-term development” are high-frequency keywords appearing in the announcements. Most companies state in their announcements that, based on their firm confidence in future development prospects and a reasonable assessment of the company’s inherent value, they have decided to repurchase shares to effectively safeguard the interests of the vast number of shareholders and enhance investor confidence.

“Share repurchase is a standard tool for capital operations in mature capital markets, and it is inherently neutral. Only by holding the compliance bottom line, adhering to the principles of integrity, and putting shareholders’ interests first—repurchasing with real money and closing the loop with compliant uses—can it truly play the role of stabilizing the market and enhancing company value.” Chen Jingjing, general manager of Hebei Huanbo Technology Co., Ltd., told Securities Daily reporter.

Implementation details need attention

By sorting through the announcements of the above companies, it is found that the subsequent destinations of repurchased shares are mostly for equity incentives, employee stock ownership plans, or cancellation.

Chen Jingjing explained that most of the repurchased shares are used for equity incentives and employee stock ownership plans, which is beneficial for maintaining the company’s value and shareholders’ rights and interests. In certain circumstances, they are used for cancellation to reduce registered capital. Canceling shares can be achieved by reducing the number of shares outstanding in circulation, thereby improving per-share earnings indicators.

Lawyer Wang Zhibin of Shanghai Minglun Law Firm told Securities Daily reporter that for the current repurchases by listed companies, four aspects of details need attention: “the actual execution after the repurchase announcement is released; whether there are behaviors that boost the share price under the guise of repurchase or manipulate the market; whether the source of funds is lawful and whether there is a phenomenon of repurchase through borrowing; and whether, after repurchasing, the shares are disposed of in accordance with regulations to ensure stability in the equity structure.”

It should be noted that behind the repurchases by many companies, they have received support from financial institutions. For example, on April 4, BOE Technology Group Co., Ltd. (hereinafter referred to as “BOE A”) issued an announcement saying it received a “Loan Commitment Letter” issued by the Beijing Branch of Industrial and Commercial Bank of China Limited. The Industrial and Commercial Bank of China’s Beijing Branch committed to provide special loan funds to the company of no more than RMB 5.0 billion and no more than 90% of the repurchase transaction price for the company’s share repurchase.

In the announcement, BOE A mentioned that obtaining the “Loan Commitment Letter” can provide financing support for the company’s share repurchases. Specifically, the loan matters shall be subject to the relevant contracts signed by both parties. The company will subsequently, according to market conditions and within the repurchase period, promote the implementation of this repurchase plan as soon as possible.

Wang Zhibin introduced that in recent years, the behavior of share repurchases by listed companies has become increasingly normalized. It has become an important means of maintaining market stability and optimizing the capital structure. From the perspective of legal compliance and market regulation, the core value of share repurchases lies in being compliant with the law, having a pure purpose, and achieving effective implementation.