Enhance Feedback Awareness, Optimize Stock Repurchase

Share buybacks have always been seen as a strong indication of the investment value of listed companies. When listed companies spend real money to "pay" for their own shares, it can improve the capital structure, optimize market value management, and boost market confidence.

Recently, Kweichow Moutai announced that it plans to use its own funds of no less than 3 billion yuan and no more than 6 billion yuan to repurchase company shares for cancellation and reduction of the company's registered capital. This is the first time Kweichow Moutai has implemented a cancellation buyback since its listing, and the large amount and excellent method have played a good leading and exemplary role.

As an effective tool for signal transmission, share buybacks have always been seen as a strong indication of the investment value of listed companies. Especially in times of economic cycle fluctuations, market valuation adjustments, and corporate stock price declines, listed companies spending real money to "pay" for their own shares can play a role in improving the capital structure, optimizing market value management, and boosting market confidence.

Thanks to the continuous guidance of regulatory authorities, in recent years, the willingness and amount of share buybacks by A-share listed companies have continued to rise. In the first eight months of this year, about 1900 listed companies have actually implemented share buyback operations, with a total buyback amount of more than 130 billion yuan, doubling the growth compared to the same period last year.

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It should also be seen that compared with the main mature markets, there is still room for optimization in the timeliness, stability, and rationality of share buybacks by A-share listed companies, with issues such as low buyback amount, long buyback cycle, more buybacks for equity incentive and employee stock ownership plans, and fewer cancellation buybacks. Some listed companies lack sincerity in buybacks, resulting in weak investor satisfaction and discounted buyback effectiveness.

At present, when investors hope for stable market operation and reasonable returns, it is necessary to further enhance the awareness of listed companies to give back, and to optimize share buyback methods and improve share buyback levels with greater sincerity.

Sincerity is reflected in strength. In the view of some listed companies, spending a lot of money to buy their own stocks, neither allows major shareholders to share cash dividends, nor directly increases company revenue, which seems not cost-effective. Therefore, even if the company has abundant book funds, it is reluctant to repurchase, or implements buybacks reluctantly and superficially. Such stinginess naturally makes it difficult for investors to accept and is even less effective in improving the company's valuation. As the cornerstone of the capital market, listed companies should bear the responsibility of supporting the market and giving back to investors. Under the premise of abundant cash flow and scientific and rational planning, in the case of market fluctuations and stock price declines, they should come up with a sufficiently generous buyback plan, actively "protect the market", inject liquidity into the market, stabilize the market, and boost confidence.

Sincerity is reflected in quick action. Slogans are beautiful, but actions must keep up. From practice, some listed companies' share buybacks are suspected of "saying one thing and doing another": some are good at calculation, always wanting to repurchase shares at a lower price, and after declaring a buyback plan, they delay and wait in execution, constantly consuming investor trust; some, when the stock price is low, throw out a large buyback plan, and at the expiration, they make various excuses, falling into the whirlpool of "deceptive buyback" public opinion. Confidence cannot withstand deception, listed companies should be more sincere and less routine, and must be trustworthy and resolute in their actions, try to shorten the buyback cycle, execute the buyback plan as soon as possible, and avoid turning good things into bad things.

Sincerity is reflected in the excellent method. Unlike buybacks for equity incentives or employee stock ownership plans, cancellation buybacks reduce the number of circulating shares, directly increasing net assets per share and earnings per share, giving more sincere feedback to all shareholders, and the positive pull effect is also more sustainable and long-lasting. Listed companies should actively implement cancellation buybacks, take the initiative to "slim down" their capital, enhance the continuity and stability of buybacks, establish a sound mechanism for regular buybacks and cancellation of shares, and promote a positive cycle of "enterprise development - investor trust - stock price improvement".

The effect is very different with sufficient sincerity. Of course, to show full "self-paying" sincerity, it is inseparable from full "paying" strength, which requires listed companies to focus on their main business, improve development quality, increase operating performance, and continuously generate abundant cash flow, and have the confidence to make a big buyback. It is believed that with the continuous recovery and improvement of China's economy, and the deepening of capital market reforms, more and more listed companies will join the ranks of share buybacks, offer full-sincerity buyback gifts, and share the fruits of high-quality development with investors.