Financial News Agency, December 6 (Reporter Lin Jian) On the afternoon of December 6, a number of listed companies recently announced their holdings increases and repurchases, and proposed the latest plans. Among these, there are central enterprise Sinopec, as well as leading company BYD. According to incomplete statistics from a financial news agency reporter, up to now, the increase in A-share holdings and repurchases since August this year have peaked slightly at least 6 times, with an overall amount exceeding 210 billion yuan.

According to Sinopec's latest announcement, as of the market closing at noon on December 6, 2023, the controlling shareholder Sinopec Group increased its holdings of the company's 1,50415 million A-shares through centralized bidding for the first time, accounting for about 0.01% of the company's total issued shares. The increase in holdings was 8.015 million yuan (excluding taxes and fees). According to previous announcements, Sinopec Group plans to increase its holdings of the company's A shares and H shares through the Shanghai Stock Exchange and the Stock Exchange within 12 months from November 11. The total amount of the proposed increase is not less than 1 billion yuan, not more than 2 billion yuan. According to the announcement, Sinopec Group will continue to choose opportunities to increase its holdings of the company in accordance with the plan to increase its holdings in the future.

The picture shows Sinopec's latest announcement on progress in increasing holdings

BYD, a leading company in Shenzhen, announced that Wang Chuanfu, the actual controller, chairman and president, proposed to buy back the company's shares for 200 million yuan. The purpose of Wang Chuanfu's proposed share repurchase will be for employee stock ownership plans, equity incentive plans, or reduction of registered capital. The specific use will be decided by the company's board of directors in accordance with relevant laws and regulations. Wang Chuanfu explained that the current BYD repurchase proposal is mainly based on confidence in the prospects of the new energy industry and the company's future development under the national “double carbon” target, as well as recognition of the company's value.

The picture shows BYD Wang Chuanfu's proposal to repurchase the company's shares

In addition to the companies mentioned above, listed companies such as Huazhi Liquor Company, Xinhua Co., Ltd., and Hisense Home Appliance Qixin Group announced the latest progress in increasing holdings and repurchases on December 6, mostly with repurchases. Four Shenzhen-listed companies, including BYD, Hisense Home Appliance, Qixin Group, and Huazhi Liquor Company, all issued repurchase proposals, with a cumulative repurchase amount of 455 million yuan to 660 million yuan.

Regarding the starting point of repurchases, the chairman of a listed company generally mentioned that based on confidence in the future development of the company and recognition of the company's value, in order to protect the interests of all shareholders of the company, enhance investor confidence, stabilize and enhance the company's value.

The repurchase and cancellation of shares by listed companies can increase the level of earnings per share

Since this year, the wave of A-share holdings and repurchases has continued, further consolidating the foundation for the smooth operation of the market. In August of this year, in response to reporters' questions about revitalizing the capital market and boosting investor confidence, the relevant person in charge of the Securities Regulatory Commission said that the next step is to work with relevant parties to further optimize the share repurchase system, support more listed companies to stabilize and boost stock prices, protect shareholders' rights and interests, and consolidate the foundation for the smooth operation of the market. A comprehensive report by the Financial Services Association on the increase in holdings and repurchases of listed companies in recent months, as well as the latest observations, uncovered the following new trends.

First, a number of listed companies have recently issued repurchase plans, cancelling repurchased shares and reducing registered capital, such as Midea Group. According to Wind statistics, since August, the number of repurchase plans issued by A-share listed companies is significantly higher than the average for the past 4 years. Among them, nearly 30 companies issued repurchase plans for the purpose of market value management, a significant increase compared to January-July of this year. Even during the peak repurchase period in April, they mainly focused on equity incentive cancellation.

According to an analysis by Guolian Securities Strategy Bao Chengchao and Wu Andong's team, policy relaxation is compounded by a downturn in the market, and the repurchase strength of listed companies continues to rise. For example, the draft “Amendment to the Company Law of the People's Republic of China” in October 2018 (draft for comments) established a treasury stock system; in January 2019, the repurchase of shares by listed companies was relaxed in various ways; in October 2020, listed companies were encouraged to repurchase shares; and in October 2022, the repurchase conditions were further optimized. The team pointed out that, in theory, the repurchase and cancellation of shares by listed companies can increase the level of earnings per share.

The reporter learned that since this year, since this year, 289 listed companies in Shenzhen have disclosed repurchase plans and are planning to repurchase 32.291 billion yuan to 58.88 billion yuan. From the beginning of August to December 5 alone, a total of 205 listed companies in Shenzhen disclosed repurchase plans, with a proposed repurchase amount of 23241-42,991 billion yuan.

Second, listed companies in the upper, middle, and lower reaches of the supply chain are beginning to increase their holdings. Recently, Youfa Group announced that some of the company's dealers plan to voluntarily increase their holdings of the company's shares, and the scale of the plan to increase their holdings is between 100 million yuan and 200 million yuan. Within the next six months, Youfa Group's dealers will choose the opportunity to implement plans to increase their holdings based on reasonable judgments on the value of the company's stock and independently judge the purchase time and price based on fluctuations in the secondary market.

Third, as important participants in the capital market, brokerage firms are actively promoting repurchases. According to the reporter's statistics, since August of this year, a total of six brokerage firms, Oriental Wealth, China Investment Capital (Anxin Securities holding shareholders), Oriental Securities, Guojin Securities, Haitong Securities, and Western Securities, have launched repurchase plans. As of December 5, the total amount of shares repurchased by 5 of these brokers has exceeded 1.3 billion yuan, while others are promoting repurchase matters. Recently, Xu Zhaohui, chairman of Western Securities, proposed to buy back some of the company's shares through centralized bidding transactions, and use them for equity incentives or employee stock ownership plans, reduction of the company's registered capital, etc. at an appropriate time in the future. He plans to use the company's own capital to buy back shares. The total capital is not less than 50 million yuan, not more than 100 million yuan.

Buybacks accompany market solarization

Focusing on the increase in holdings and repurchases in recent months, there are four major characteristics as a whole: first, the intensity of increased holdings and repurchases is particularly obvious, which continues to send a positive signal to the market; second, the level of real money investment in real money is impressive. Since this year, more than 1,000 companies have issued stock repurchase plans. The total proposed repurchase amount exceeds 130 billion yuan, and more than 300 companies have announced plans to increase their shareholders' holdings. The proposed increase in holdings is capped at nearly 80 billion yuan, for an overall total of more than 210 billion yuan.

Furthermore, leading listed companies have initiated holdings increase and repurchase plans, which have had a leading effect. Apart from BYD, etc., the repurchase and increase in holdings of leading companies such as Ningde Times is expected to act as a weather vane. Finally, there is no shortage of central enterprise holding companies that have proposed plans to increase their holdings and repurchase plans, such as Sinopec, which recently announced progress, and the Shenzhen Central Bank Titanium White, etc.

However, it is also worth mentioning that in addition to boosting market confidence through repurchase behavior, the long-term value of the market still depends on positive economic fundamentals and business performance. Guolian Securities Strategy Bao Chengchao and Wu Andong's team said that the increase in short-term repurchases may support the gradual stabilization of the market, and there is still room for growth in the medium to long term in terms of market value management in the medium to long term.

1) As repurchases increase, the market may gradually bottom out. Judging from historical experience, the number of repurchases by listed companies increased during the downturn in the market. In this round, since March of this year, the number of repurchases by listed companies has been on the rise. Judging from the seasonal effects of recent years, the number of repurchase plans in December may increase month-on-month, which will further support market confidence.

2) There is still room for improvement in the strength of market value management carried out by A-share listed companies to repurchase shares and cancel shares. Judging from the absolute ratio, currently the share repurchases of listed companies for the purpose of market value management are less than 3%; since 2013, this ratio has been as high as 10%.