The survey of Chinese listed companies' research shows that this round of repurchase has five characteristics: active repurchase into the mainstream, more repurchase power, more lenient legal environment for repurchase, and important dredge effect on equity pledge risk.
As of November 8, a total of 609 A-share companies have completed 869 repurchase agreements this year. The total repurchase funds amounted to 33.673 billion yuan, and the number of shares repurchased reached 4.825 billion shares. The amount of repurchase from 2015 to 2017 was 4.666 billion yuan, 10.55 billion yuan, and 7.914 billion yuan, which means that the repurchase scale of 11 months this year has exceeded the total of three years.
Since the Shanghai Composite Index fell below the 3,000-point mark in mid-June this year, the number of listed companies and the repurchase scale of the repurchase plan in the A-share market have increased significantly, showing a gradual upward trend.
On October 26, the repurchase of new regulations has been implemented (November 8), 154 companies disclosed the relevant repurchase progress, 57 of which disclosed the repurchase plan, and many companies issued repurchase proposals. According to the repurchase ceiling, the above 57 companies expect the repurchase amount to reach 17.799 billion yuan. The repurchase amount of Hengli, Yunnan Baiyao, Xinhu Zhongbao and Tongwei shares exceeds 1 billion yuan. The A share repurchase camp is still Continue to expand.
Since the beginning of this year, the overall market of the A-share market has been sluggish. The Shanghai Composite Index has fallen more than 20% year-to-date. Many stocks have hit a record low for many years, which has triggered a new wave of repurchase.
1, the new regulations help repurchase tide
Low overall market valuationRepurchase power is stronger
Since the market has fluctuated this year, the “protection” of overweight, repurchase and dividends has continued. Why is repurchase attracting attention?
Low overall market valuation
According to the P/B ratio (excluding negative value) as of November 8, there are 384 stocks with a P/B ratio of less than 1, accounting for 10.62% of the total market stocks, of which 43 are P/B ratios less than 0.7.
ReviewShanghai indexAccording to the data of January 2, 2016 at the low of 2638, there were 53 net stocks, accounting for 1.89% of the total stocks at that time. The number and proportion were less than the current 30%. It can be seen that the current number of broken net shares or the proportion is far higher than the historical low of 2638 points.
From a valuation perspective, as of November 8, the overall P/E ratio of all A-shares is 11.61 times (the Shanghai Composite Index P/E ratio). The current overall valuation of the A-share market is already comparable to the historical bottom, and the valuation is at the bottom. . Under the overall low market valuation, listed companies start stock repurchase, which is more representative of the company's management's confidence in the company's future development.
Repurchase power is stronger
Since the beginning of this year, in addition to the impact of the external environment, the risk of equity pledges has become an important factor affecting the market. A series of measures have been introduced around the liberation of equity pledge risks.
According to the equity pledge risk model, as of November 8, there were 2,159 stocks in the A-share market with equity pledge, of which 704 stocks fell to the vicinity of the equity pledge warning line, and 368 listed companies fell to the close line (the pledge) The rate is 40%, the liquidation line and the warning line are 130% to 150%, respectively, and the pledge cost ranges from the pledge data for the last two years).
According to the statistics of the research institutes of Chinese listed companies, according to the latest announcement date of the equity pledge, there are 1757 listed companies involved in equity pledge of controlling shareholders, of which 436 are listed companies with a pledge of more than 90% of the controlling shareholders.
Although all parties in the market are trying to resolve the risk of equity pledge, the most ideal result is that the stock price can rise above the liquidation line.
Combined with the current market, repurchase can bring incremental funds to the market, which is conducive to stabilizing the market and mitigating risks. For listed companies with a high proportion of equity pledge and sufficient cash flow, repurchase is also a good medicine.
Active repo increases
Previously, stock repurchases were mostlyRestricted stockFor the passive repurchase of the target, the number of ordinary repo cases implemented by the listed companies in the repurchase market to enhance investor confidence or to carry out employee stock ownership plans has increased significantly.
According to the company that issued the repurchase announcement since October 27 this year, most of the company's repurchase motivation is based on the confidence of the company's future development prospects, based on the company's long-term sustainable development and value growth, in order to enhance investors' The company's investment confidence, safeguard the interests of investors and so on.
The statistics of the research institutes of Chinese listed companies show that in the wave of repurchase in the last wave (2015-2016), the passive repurchase due to the resignation of the incentive object, resignation or resignation from the company or the repurchase of the company or individual performance is not the highest. Dominant position, accounting for more than 90%.
It can be seen that the number of active repo cases in this wave of repurchase has surged, and the number of “self-rescue” by listed companies through active repurchase has increased significantly compared with the previous repurchase.
2. What is the difference between this round of repurchase?
In April 2011, Health Yuan kicked off the A-share repurchase. In addition to this wave of repurchase this year, looking back at history, there are two large-scale repurchases in the history of A-shares. The first wave of repurchase occurred between the end of 2012 and mid-2013; the second wave of repurchase occurred in mid-June 2015, and after the market fell sharply in early 2016, the A-share market share repurchase ratio and repurchase amount showed a significant peak . During the period from the beginning of August 2015 to the end of June 2016, a total of 213 listed companies completed the repurchase, with a total repurchase scale of 10.215 billion yuan.
Taking the second round of repurchase as an example, comparing the monthly repurchase amount of listed companies with the trend of the Shanghai Composite Index (average closing price), the market trend is an important factor affecting the repurchase behavior of A shares.
In the extreme market, the repurchase strength of listed companies is positively related to the decline in the market. When the market fell by a large margin, the repurchase of listed companies increased significantly, and the A-share repo tide generally appeared after the market crash. As the market gradually stabilized, the repurchase tide gradually receded.
Historical experience, repurchase has always been an important tool for maintaining the stock price of the A-share market. More is to release a positive signal, and it will not have an immediate effect on the market trend. The potential has an immediate effect.
3, the market fell triggered by the tide of repurchase
Rational screening of symbolic repurchaseRepurchase capital increased, repurchase legal environment relaxed
This round of repurchase has played a positive role in resolving market risks and increasing market liquidity. The share repurchase is actually that the listed company buys its own shares from its own pockets, and will not change the fundamental factors such as the profitability and financial status of the listed company.
Historical experience shows that in the case of irrational fluctuations in the capital market and continued sluggishness, repurchase has become a major means for listed companies to stock prices. This round of repurchase has also appeared after the market crash, and today the repo tide is still spreading.
For investors, we should rationally look at the impact of the repurchase tide, especially to be wary of various symbolic repurchases. According to past experience, there are also many cases in which the listed companies have not implemented the plan after the release of the plan, and the repurchase of the 1 yuan repurchase. Among the listed companies that have completed the repurchase this year, the total repurchase of Taisheng Wind Energy, Barita, Innovation Medical, Yanhua Intelligent, and Zhejiang University Newcomer is less than 2 yuan.
Repurchase capital has increased
For listed companies, repurchase also requires a certain amount of capital. According to the listed companies that have announced the repurchase announcement since October 27, more than 90% of the repurchase in the A-share market is paid by the company's own cash, and some of the repurchase funds are from self-raised cash (excluding 8 Companies that have not announced the source of funds). And cash payment is a test of the profitability of listed companies.
According to the 2012-2017 annual report, the financial listed companies are excluded, and the overall profitability of listed companies has increased year by year in terms of the average net profit of all listed companies. In terms of net profit for the first three quarters of 2018, this value reached 421 million yuan higher than the corresponding value in the first three quarters of 2017 (3.77 billion yuan).
Repurchase legal environment relaxed
In the mature capital market, repurchase has become one of the commonly used capital operations. Relevant statistics show that in the second quarter of 2009 to 2018, the total amount of shares repurchased by the Standard & Poor's 500 Index companies exceeded $4 trillion, accounting for more than 50% of the company's total net profit.
As far as US experience is concerned, repurchase is one of the driving forces of the US bull market. In recent years, repurchase has reached an annual average of tens of billions. In addition to subjective factors such as low financing costs and abundant cash flow, the relaxed legal environment is a key supporting factor for the US repurchase fever.
The US stock market adopts the attitude of “permitted by principle and prohibited by exception” for repurchase. Hong Kong's restrictions on repo transactions are slightly stricter than those of the United States, but they are much more lenient than A-share repurchases. The A-share market adopts the attitude of “principle prohibition, exception permission” for repurchase, and requires the approval of the general meeting of shareholders, and there are more requirements for repurchase transactions.
Compared with US stocks and Hong Kong stocks, the legal environment is an important factor restricting A-share repurchase. In the past, A-share repurchases only involved four kinds of allowable ranges.
The new company law has relaxed the scope and condition policy of repurchase, extended the cycle of treasury stocks, and facilitated the release of the repurchase potential of the A-share market.
(Article source: Securities Times)