Source: Caixin Media.
The mid-term performance period of the Hong Kong stock market is about to end, and many companies have announced generous buyback plans while disclosing quarterly or mid-term performance.
JD.com launches a $5 billion share buyback.
Shrouded in major shareholders$Walmart (WMT.US)$Logistics giant amid the gloom of clearance $JD.com (JD.US)$ suddenly announced that it has obtained board approval for a new share buyback plan, effective from September 2024, and can repurchase shares worth up to $5 billion within the next 36 months. This huge buyback is equivalent to 12.95% of the current market cap of the US stock market, which is $38.62 billion ($26.38 per share).
It is worth noting that in March of this year, $JD-SW (09618.HK)$ Only a $3 billion share buyback plan was approved, and it was announced on August 21st that it has been fully utilized. In the first half of this year, the company repurchased a total of $3.3 billion worth of shares, accounting for approximately 7.1% of its outstanding ordinary shares in circulation at the end of 2023.
This $5 billion buyback plan is an additional move on top of that, and together they may account for more than 20% of JD.com's current market capitalization, which is significant.
Anta's billion-dollar buyback
Just announced the first half of 2024 performance of the footwear leader $ANTA SPORTS (02020.HK)$ Also announced a billion-dollar buyback plan with the performance. The company plans to use no more than HK$10 billion within 18 months to implement the share buyback plan. Based on Anta's current stock price of HK $75.75, with a market capitalization of HK $214.571 billion, this buyback plan is roughly equivalent to 4.66% of its market capitalization.
In addition, Anta also declared a mid-term dividend of HKD 1.18 per share, a year-on-year increase of 43.9%, with a dividend payout ratio of 50.1%, equivalent to 1.56% of the current price of HKD 75.75. Taking into account the mid-term dividend and the repurchase amount, Anta may bring a return of over 6% to shareholders in the future.
Alibaba is the most generous in terms of giving back.
However, when it comes to buybacks, the most "vicious" one should be $BABA-W (09988.HK)$ / $Alibaba (BABA.US)$ In the quarter ended June 30, 2024, Alibaba repurchased a total of 0.613 billion common shares with a total amount of USD 5.8 billion; in the quarter ended March 31, 2024, the group had repurchased a total of 0.524 billion common shares with a total amount of USD 4.8 billion. In other words, in the first half of 2024, Alibaba spent a total of USD 10.6 billion and repurchased over 1.1 billion common shares, which is equivalent to 5.55% of its current market cap of USD 190.83 billion (calculated at the current price of USD 81.45).
As of June 30, 2024, Alibaba still has a buyback amount of USD 26.1 billion, valid until March 2027, which is equivalent to 13.68% of its current market cap, and this does not include Alibaba's potential dividends.
As of the end of the fiscal year ending in March 2024, Alibaba declared regular cash dividends of $0.125 per share and a special dividend of $0.0825 per share, totaling $0.2075, approximately equivalent to 0.25% of Alibaba's current price of $81.45.
Recent share buyback program
In addition to the substantial buyback programs of the three listed companies mentioned above, several other large companies have also announced their own buyback programs in the past month.
House rental trading service platform$KE Holdings (BEKE.US)$When announcing the quarterly performance for June 2024, the company also stated that, with a strong cash reserve, they will continue to provide shareholder returns through active share buybacks. They established a share buyback program starting in August 2022, which was subsequently expanded and extended in August 2023. In August of this year, the company further increased the authorized buyback amount from $2 billion to $3 billion, and extended the buyback program until August 31, 2025.
As of August 12, 2024, $BEKE-W (02423.HK)$ A total of $1.3898 billion has been used to repurchase 95 million American depositary shares, which means that the $3 billion repurchase plan still has an amount of $1.6102 billion, which is approximately 9.13% of its market value of $17.638 billion (based on $14.53).
As of June 30, 2024, Keholding has $9.409 billion in cash and cash equivalents, equivalent to approximately $1.295 billion; short-term investments amount to RMB 42.223 billion, equivalent to approximately $5.81 billion; short-term borrowings only amount to RMB 0.446 billion, and the total liabilities account for only 42.28% of the total assets. It can be seen that Keholding has abundant financial resources to support its buyback plan.
Recently in the center of public opinion.$NEW ORIENTAL-S (09901.HK)$On August 6, it also announced that the authorized amount of its original share buyback plan has been increased from $0.4 billion to $0.7 billion, with an expiration date of May 31, 2025. It also announced plans to distribute a special cash dividend of $0.06 per share, totaling $0.1 billion.
The company with the highest buyback amount in the Hong Kong stock market this year.
As mentioned above, both Alibaba and JD.com have very large buyback amounts. However, their buyback activities are mainly in the US stock market. In the Hong Kong stock market, the company with the highest buyback amount is $TENCENT (00700.HK)$.
According to Wind's data, from the beginning of the year to August 28, 2024, Tencent has invested a total of 69.375 billion Hong Kong dollars to repurchase 0.1998 billion shares, equivalent to approximately 8.895 billion US dollars, which is approximately 1.98% of Tencent's current market cap of 3.5 trillion Hong Kong dollars (based on 375.00 Hong Kong dollars).
On July 31, 2024, when announcing quarterly performance, the board of directors also declared a second dividend of $0.1 per share. In the first half of the year, a total of $0.20 per share was selected as quarterly dividend, and a share buyback of up to $3 billion was planned, expected to be completed within three months. Based on its cash flow statement, in the first half of 2024, HSBC cancelled shares worth $5.33 billion, and distributed a total of $12.685 billion in dividends, totaling $18.015 billion, which is equivalent to 11.15% of its market value of 1260 billion Hong Kong dollars (based on 68.40 Hong Kong dollars). $HSBC HOLDINGS (00005.HK)$ In the first half of this year, it returned $3.4 billion to shareholders through dividends and share buybacks, equivalent to 4.29% of its current market value of 618.036 billion Hong Kong dollars (based on 55.90 Hong Kong dollars), or approximately $79.238 billion. In April of this year, the company announced an increase in the repurchase amount of $2 billion to $12 billion, equivalent to 15.14% of its market value. In addition, in the interim performance, the company declared an interim dividend of 0.445 Hong Kong dollars per share, up 5.2%.
In addition,$MEITUAN-W (03690.HK)$Also a share buyback powerhouse, the company has repurchased HKD 23.326 billion so far this year, equivalent to 3.69% of its current market cap. The company will announce its mid-term performance later, which may provide further insights into its buyback plan.
In addition, some smaller listed companies with relatively large market caps have also launched buyback plans, such as the operator of KFC in the Greater China region.$YUM CHINA (09987.HK)$In the first half of this year, it has returned nearly USD 1 billion to shareholders through share buybacks and cash dividends, exceeding the total amount of returns for the entire year of 2023, which is approximately 7.75% of its current market cap of HKD 100.666 billion (calculated at the current price of HKD 262.60), equivalent to USD 12.906 billion. As of June 30, 2024, there is still approximately USD 0.666 billion of buyback quota unused.$Yum China (YUMC.US)$There is still approximately USD 0.666 billion of buyback quota unused by June 30, 2024.
Summary
The large-scale share buyback of listed companies is partly related to offsetting the impact of some negative news at the moment.$New Oriental (EDU.US)$but more likely to provide support for the stock price. The low stock price and solid financial foundation are the confidence of these listed companies' large-scale share buybacks. Share buybacks also benefit the governance and financial discipline of listed companies, returning profits to shareholders and reducing the risk of management's misuse of company resources in low-return or even loss-making projects.
On the other hand, the prevalence of share buybacks may also mean that the current evaluation of potential investment plan returns of these listed companies is not as good as the benefits of appeasing shareholders through share buybacks. From the perspective of corporate development, while engaging in large-scale share buybacks, it may also be necessary to actively consider the company's strategic prospects and lay the groundwork in advance to welcome future opportunities. If the purpose is merely to satisfy shareholders without considering the creation of future value, it is not beneficial.
Editor / jayden