The 1 billion repurchase of Oriental Fortune has been completed, and the purpose has been changed to "cancellation", what is the profound meaning?

Finance Associated Press, February 26 (Reporter Lin Jian) In the form of repurchase, brokerages are helping A-shares with real money.

On the evening of February 26, Oriental Wealth disclosed the latest repurchase progress, announcing that this round of repurchase has ended, and the use of funds reached 999 million yuan (excluding transaction costs). At the same time, Oriental Wealth also said that it would change the use of this part of the 1 billion yuan repurchase from the original plan of "repurchased shares are intended to be used for employee stock ownership plans or equity incentive plans" to "used for cancellation and reduction of registered capital", which can take effect only after the company's general meeting of shareholders deliberates and approves.

The picture shows that Oriental Fortune issued an announcement on the progress of the repurchase and decided to change the purpose of the repurchase

There are three major highlights of the brokerage in this round of repurchases, which boost investor confidence

Far more than Oriental Wealth, the Financial Associated Press reporter combed and found that in addition to Oriental Wealth, there are Huatai Securities, Haitong Securities, Guojin Securities, Oriental Securities, Soochow Securities, Western Securities and other 6 listed brokers, as well as 2 securities companies such as State Investment Capital and Aijian Group, which participate in the holding of listed companies, have recently disclosed announcements such as repurchase cancellation, repurchase progress or repurchase plan. In the opinion of the interviewed brokers, there are three major highlights of the repurchase initiated by listed securities institutions in this round, which are worth paying attention to:

The first point of interest is reflected in the increasing willingness of A-share listed companies to actively use repurchase tools to maintain the value of their companies, and the pace of repurchase by securities companies is accelerating. Recently, a number of securities firms and securities companies participating in the holding of listed companies have actively thrown out repurchase plans, among them, Guojin Securities has launched two rounds of repurchase since August 2023, the first round of repurchase has cost 202 million yuan, the second round is still in progress, the total repurchase funds are not less than 50 million yuan, not more than 100 million yuan;

For a group of listed securities companies with frequent recent repurchase actions, the research report on the non-bank financial industry of Cinda Securities pointed out that the recent repurchase progress of brokerages has accelerated, reflecting the confidence in the company's development and capital market prospects, and is expected to enhance the prosperity of the sector. Guojin Securities said that the reason and purpose of the proposed share repurchase are that the company's controlling shareholders are based on their confidence in the company's sustainable development and a high degree of recognition of the company's value, in order to safeguard the interests of investors, enhance investors' confidence in the company's investment, and promote the company's stable and healthy development.

The second point of interest lies in the implementation of "improving quality and efficiency and emphasizing returns", and securities companies have successively begun to change the "cancellation and repurchase of A-share shares and reduction of registered capital" to the planned use and direction. In fact, from the perspective of the industry, most of the use of shares repurchased by securities companies is used for employee stock ownership plans or equity incentive plans, and the purpose of repurchased shares is clearly repurchased and cancelled.

Including this Oriental Wealth, not long ago on February 20, Soochow Securities just announced that it planned to cancel and repurchase 38.7998 million shares of A shares, and the company's registered capital was changed from 5.008 billion yuan to 4.969 billion yuan. Earlier, on February 6, Guojin Securities announced the second round of repurchases, mentioning that all the repurchased shares would be used to reduce the company's registered capital.

It is worth mentioning that Oriental Wealth's proposal to adjust the use of the company's shares and cancel it was finally approved and implemented by the general meeting of shareholders, so Oriental Wealth is the listed brokerage company that has implemented share repurchase since 2023 and the purpose of repurchased shares is the highest total amount of repurchase funds among the listed securities firms that have implemented share repurchase since 2023.

The third point of interest is that the buyback further embodies the investor-oriented concept, further enhances the company's value and the long-term return of shareholders, so as to safeguard the interests of investors and enhance investors' confidence in the company's investment. As a basic institutional arrangement in the capital market, share repurchase has the functional role of optimizing the capital structure, maintaining the company's investment value, and improving the return mechanism for investors. **

Oriental Fortune said that in order to practice the "investor-oriented" development concept of listed companies, effectively safeguard the interests of investors and enhance market confidence, based on the confidence in the company's future development prospects and the recognition of the company's stock value, Oriental Wealth combined with the actual situation, actively responded to the call of supervision, in-depth study of the spirit of the meeting, insisted on resonating with the national strategy at the same frequency, and took the initiative to take measures to maintain the company's value and shareholders' rights. At the same time, Oriental Fortune will always adhere to the original intention of serving the country with finance, improve its political position, strengthen its mission, uphold the mission of "linking people and wealth, creating more value for users", provide all-round wealth management services around the "user-centric", unswervingly take the road of high-quality development, better serve the construction of the capital market, and help give full play to the core functions of the capital market.

On the same day that Guojin Securities announced the second round of repurchase, Western Securities also issued a share repurchase plan, intending to use its own funds to repurchase part of the company's A shares in a centralized bidding transaction, and the repurchased shares will be used for equity incentives or employee stock ownership plans. It is reported that the repurchase amount of Western Securities is not less than 50 million yuan and not more than 100 million yuan.

Western Securities also said that based on the confidence in the company's future development prospects and the high recognition of the company's value, combined with the company's main business development prospects and financial situation, it intends to use its own funds to repurchase part of the company's A shares for equity incentives or employee stock ownership plans, improve long-term shareholder returns, promote the long-term incentive and restraint mechanism of the management team, promote the consistency of interests and revenue sharing between employees and shareholders, enhance the overall value of the company, enhance investor confidence, and effectively promote the long-term healthy development of the company.

More listed securities firms are expected to carry out buybacks and deregistrations

Compared with the repurchase of shares for equity incentives, the repurchase of shares for cancellation and corresponding reduction of registered capital can increase earnings per share, and earnings per share is one of the basis for the company's stock price pricing, this kind of repurchase is more conducive to boosting the company's stock price and benefiting ordinary investors.

It is expected that more listed securities firms and listed companies in other industries will actively carry out buybacks and cancellations. In August 2023, the China Securities Regulatory Commission (CSRC) clarified a package of policy measures to "activate the capital market and boost investor confidence", which mentioned that "revise the rules of the share repurchase system, relax the relevant repurchase conditions, and support listed companies to carry out share repurchases", and in December of the same year, the China Securities Regulatory Commission revised and issued the "Share Repurchase Rules for Listed Companies" to further enhance the convenience of listed companies to implement share repurchases, and promote listed companies to use share repurchases as a tool to optimize their equity structure, so as to enhance the value of the company and the long-term return of shareholders.

From January 25 to 26 this year, the China Securities Regulatory Commission held the 2024 system work conference to summarize the work in 2023, analyze the situation of the capital market, and study and deploy the key work in 2024. The meeting emphasized the need to highlight the concept of investor-oriented. Among them, we will vigorously promote the improvement of the investability of listed companies, improve the quality evaluation standards of listed companies, urge and guide listed companies to strengthen the awareness of returning investors, and more actively carry out repurchase and cancellation and cash dividends.

Industry insiders pointed out that listed securities companies continued to increase their repurchase and increase their holdings, which provided support for the further reshaping and repair of their subsequent valuations. While brokerages use real money to boost market confidence, it is also conducive to the company's own long-term development and stock price stability. In the long run, driven by the policy boost and the buyback effect of listed companies, the overall confidence of the market is expected to gradually recover.

As an important way of counter-cyclical capital operation, repurchase can convey to the market that the company's value may be undervalued, and boost market confidence to a certain extent.

Yang Chao of Galaxy Securities said that the number of repurchased shares means that the current company's stock price is undervalued, listed companies are taking measures to enhance the company's investment value, and the repurchase of shares for cancellation of the company, there are more high-quality enterprises, in the current economic recovery situation, indicating that the market sentiment is gradually boosting. Buyback write-offs can boost investor confidence to a large extent and herald a gradual recovery of the market.

(Finance Associated Press reporter Lin Jian)