Text/Leju Finance Xu Jiumian
"Galaxy wants to do 500 years, not the top 500" "Doing business in Galaxy does not make money, it is not a mistake, but a crime"...
Five months ago, Star Commercial (6668. HK) At the 2022 annual general meeting, in front of more than 50 investors and analysts from Shenzhen, Shanghai, Beijing and Hong Kong, Huang Chulong, who sat in the center of the senior management of the "Galaxy System", frequently appeared golden sentences.
On that day, Huang Chulong wore a classic black and white business dress with a red tie symbolized by passion. Sitting on his left hand side is his youngest son, Huang Delin, with the same red tie on his chest, but it looks a few degrees lighter.
In front of a group of investors, shouting that they want to make money for 500 years, the corresponding to the reality is a falling stock price. Year-to-date, the share price of Xingsheng Commercial has fallen by more than 65%, more than 60% of listed property companies.
The stock price was volatile, and Star Commercial started its first buyback of the year. On November 3, it announced its intention to buy back shares in the open market. The buyback was quickly implemented, and on November 4 and 8, Star Commercial repurchased 100,000 shares and 45,000 shares respectively, paying a consideration of about HK $119,000 and HK $56 million respectively.
The buyback still played a role in pulling up the stock price, and after the previous buyback, Xingsheng Commercial closed up for two consecutive trading days; Shortly after the opening of the market on November 9, its share price also turned red again.
According to the resolution of the Company's Annual General Meeting held on June 10 this year, Star Commercial may repurchase no more than 102 million shares of the Company in the open market, i.e. 10% of the total number of issued shares on the date of the AGM.
At present, Star Commercial also has the right to buy back more than 100 million shares. Based on the closing price of HK$1.24 per share of Xingsheng Commercial on November 8, the completion of the repurchase ceiling will require the preparation of about HK$126 million. How to maximize the effectiveness of the buyback also needs to be carefully considered by its board.
Huang father and son increased their holdings by 736,000 shares during the year
The haze of the epidemic that cannot be dispersed and the ongoing real estate decline make it difficult for Xingsheng Commerce, which takes pure commercial operation services, to escape the fate of falling stock prices and "shrinking" market value.
As the first company listed on the main board of Galaxy system, Star Commercial is also Huang Chulong's only capital wheel. In the face of the volatile and falling stock price trend, although this year did not buy back for the first time until November, before that, the Huang father and son have been paying out of their own pockets to release confidence by increasing their holdings.
According to statistics from Leju Finance's "Property K-line", since the beginning of this year, Huang Chulong and his son Huang Delin have increased their holdings of 736,000 shares in Xingsheng Commercial, with a total consideration of about HK $1.7095 million.
Among them, Huang Chulong, as the controlling shareholder of Xingsheng Commercial, increased his holdings a total of 5 times, with a total investment of about HK $1.5907 million, with a total increase of 650,000 shares.
The latest increase was on August 26, when Wong added a total of 100,000 shares in the open market for HK$161,300. After this increase, Huang Chulong held a total of 751 million shares, accounting for 73.62% of the issued shares of Xingsheng Commercial on the date of the announcement, including 150 million shares held by Derui Investment, an equity incentive platform jointly owned by his son Huang Delin, accounting for about 14.71% of the equity.
Huang Delin, who is also the chairman of the board of directors and an executive director, was entrusted by his father Huang Chulong to control the company's equity incentive platform Derui Investment when Xingsheng Commercial was listed. On September 21, 22 and 23, Wong added a total of 86,000 shares in the open market for three consecutive days, for a total consideration of about HK$118,800. After this increase, Huang Delin holds a total of 150.086 million shares, accounting for about 14.71% of the issued shares of Xingsheng Commercial on the date of the announcement.
The continuous increase of Huang Chulong and Huang Delin did not save the downward trend of Xingsheng Commercial's stock price in the environment of collective diving of property stocks. The launch of the buyback, the future pulling effect on the stock price, still needs time to test.
In the first half of the year, dividends exceeded 20 million yuan
In the downward stage of stock prices, buyback or increase holdings are both means to send positive signals to market investors, and are the operation of the company's management to protect the market.
However, there are differences. The buyback is carried out with the company's funds and will reduce the amount of stock liquidity in the market, which can increase the profitability per share; The increase in holdings is carried out with the personal funds of shareholders, which will not reduce the amount of stock liquidity in the market, but will increase the shareholders' shareholding.
Last year, Star Commercial spent a total of about HK$2.44 million to buy back and cancel 601,000 shares. At the same time, Huang Chulong increased his holdings of a total of 350,000 shares for HK$1,209,500 twice, while Huang Chulong's eldest son, Huang Dean, increased his holdings five times as a non-executive director from April to September, with a total of 1.421 million shares, with a total consideration of HK$5.595 million.
In fact, with the current shareholding structure of Xingsheng Commercial, whether the effect of buyback or increase in holdings on the stock price can be seen immediately, in fact, will not affect the profitability of Huang Chulong and his family. The shares currently repurchased, the future stock price rises, can be placed for financing, to help enterprises expand reproduction; The shares that have been increased at the moment can also allow shareholders to receive a higher proportion of dividends in future dividends.
In the first half of 2022, Xingsheng Commercial achieved revenue of about 260 million yuan, a year-on-year increase of 0.8%, and net profit attributable to the parent was 96 million yuan, a year-on-year increase of 15.7%; Gross profit was about 150 million yuan, a year-on-year increase of about 2.6%, and gross profit margin was 57.7%, an increase of 1 percentage point year-on-year.
As of June 30, 2022, the total number of shares of Huang Chulong and his two sons is about 752 million shares, accounting for 73.71% of the issued shares. According to the dividend payment plan disclosed by Star Commercial in the Chinese Report - HK$0.035 per share, the dividends received by the Huang father and son in the first half of this year totaled about HK$26.3127 million.
In the face of dividends in the first half of the year, the price paid by Huang Chulong's father and son to increase their holdings is not worth mentioning.
In addition, as of June 30, 2022, Star Commercial had cash and cash equivalents and time deposits totaling $131,100. Excluding the net balance of IPO fundraising of 692 million yuan, Star Commercial also has about 600 million yuan of internal funds. In the second half of the year, part of the internal resources are used as ammunition reserves for the repurchase of shares, which can stimulate the stock price, and even if it cannot, it can also boost the investment income.
Repurchases are surging
At present, the property capital market is bleak.
According to the statistics of Leju Finance's "Property K-line", up to now, there are a total of 62 "A+H" stocks. So far this year, only Zhongtian Services and H-share German Commercial Investment Services, which have just completed backdoor listings, have maintained their share prices, while the share prices of the remaining 60 listed property companies have all declined. Among them, the share price of Zhenrong Services fell by more than 90%.
The property stock market was in turmoil, and property companies launched self-rescue actions, and many property companies announced repurchase plans during the year.
According to the statistics of Leju Finance's "Property K-Line", including Xingsheng Commercial, 7 property companies have taken a total of 82 repurchase actions, repurchasing nearly 100 million shares, with a total repurchase amount of about HK $428 million.
Among them, Greentown Services has been the hottest in the property capital market in recent months. Since the announcement of the buyback on September 2, the related actions have not stopped. According to statistics from Leju Finance's "Property K-line", since September 5, Greentown Services has carried out a total of 24 repurchases, involving 17.6 million shares, with a total consideration of about 85.9539 million yuan.
"It is proposed that the share repurchase and subsequent cancellation of the repurchased shares may increase the value of the shares", under the Greentown Service Repurchase Program, it was approved to repurchase up to 24.74 million shares, representing 10% of its total share capital, on the Hong Kong Stock Exchange under the repurchase authorization. So far, Greentown Services has repurchased up to 7.14 million shares.
It is worth noting that this is the first time that Greentown Services has started a buyback action since its listing in July 2016.
From the perspective of time, the upsurge of repurchase by property companies since the beginning of this year occurred in September after the end of the mid-reporting season. Greentown Services, Jianye New Life, and DXN Service Group carried out a total of 31 buyback actions.
In addition, according to Country Garden Services' announcement on July 15, it will repurchase no more than 337 million shares in the open market, representing 10% of the total share capital. So far, it has only launched five buybacks from July 15 to 21, with a total of 1.647 million shares repurchased at a total consideration of HK$36.9109 million.
At the same time, Jianye New Life announced in early September that it intends to buy back no more than 126.9 million shares, accounting for 10% of the total share capital, in the open market under the repurchase right. Since September, Jianye New Life has repurchased a total of about 2.158 million shares in the open market.
Compared with the buybacks of listed property companies in 2021, the number of repurchased shares has doubled this year, but the repurchase amount is only about one-third of last year.
Judging from the timeline of the repurchase of property companies last year, the end of the year is also a small climax, and listed property companies such as Xingsheng Commercial, Country Garden Service, and Jianye New Life can push the scale of repurchase this year, or it is worth looking forward to.