Text | Li Delin
On April 10, as soon as the repurchase announcement of Xinjufeng came out, the stock price fell below 9 yuan, which was good and negative, and investors began to continue selling, and the stock price fell to about 7.25 yuan within five days. Why did Xinjufeng's repurchase turn into a negative one? Its repurchase is not only a listed company that personally speculates in stocks, but also violates Article 3 of the "Nine Articles of the State." Behind the pessimism of investors, the battle for control of Xinjufeng and Greatview Packaging has inspired the rise of the will of minority shareholders, and the future prospects are unpredictable.
On April 10, Xinjufeng announced that the company was ready to repurchase shares of no less than 25 million yuan and no more than 50 million yuan, and the repurchase price should not exceed 12 yuan per share. According to the repurchase conditions given by Xinjufeng, if it does not exceed 50 million yuan, it can repurchase 4,166,700 shares, accounting for 0.99% of the total share capital, and if it is calculated at the price of 25 million yuan, the upper limit is 12 yuan, 2,083,300 shares, accounting for 0.5% of the total share capital. The repurchase period agreed by Xinjufeng is 3 months.
Why did the good become the negative?
Xinjufeng said that if the stock price exceeds 12 yuan, the company will not repurchase, and if the repurchase plan has a major impact on the stock price of a major event or due to major changes in external objective circumstances, the board of directors decides to terminate it. The crux of the matter is what is the use of the shares after the buyback? Many companies use them for equity incentives. Xinjufeng is not, the announcement said that the repurchased shares were all used for sale through call auction transactions in accordance with relevant rules 12 months after the disclosure of the repurchase results and share change report.
Translated, the repurchase of Xinjufeng is less than 1% of the total share capital, and the stock price will be repurchased within three months if the stock price is less than 12 yuan, and it will not be repurchased if it exceeds this price. Of course, in the repurchase process, even if the stock price is within 12 yuan, the board of directors may decide not to repurchase due to specific circumstances, and our company will keep the repurchased shares, and we will still sell these shares after one year. Xinjufeng has set a three-year sell-off period for himself, why is it so long?
As soon as the repurchase announcement of Xinjufeng came out, the stock price began to fall. Why? Because Xinjufeng said that if the shares repurchased within three years are not sold, the remaining part will be cancelled. What does it mean? That is, Xinjufeng wants to choose the opportunity to sell at a high level. Xinjufeng will be listed on September 2, 2022, with an issue price of 18.19 yuan, and the opening price is the highest price in history of 22.07 yuan.
On the third day of Xinjufeng's announcement, the "National Nine Articles" were released. Article 3 of the "Nine Articles of the State" proposes to promote listed companies to enhance their investment value, guide listed companies to repurchase shares and cancel them in accordance with the law, and strictly crack down on market manipulation, insider trading, and other violations of laws and regulations in the name of market value management.
Xinjufeng's repurchase announcement was issued before the announcement of the "National Nine Articles", and after the announcement of the "National Nine Articles", New Jufeng did not revise the repurchase terms, and during the announcement of the 2023 financial report on April 24, it also did not propose amendments to the repurchase plan.
As of April 10, at least more than 90 A-share listed companies have issued announcements to repurchase shares and cancel shares. In particular, on March 15, the China Securities Regulatory Commission issued the "Opinions on Strengthening the Supervision of Listed Companies (Trial)", in which Article 14 requires listed companies to actively carry out share repurchases and guide companies to repurchase and cancel to enhance the effect of stabilizing the market. After the issuance of the "National Nine Articles", a number of listed companies led by GigaDevice that have issued repurchase announcements have changed the purpose of repurchased shares and cancelled them.
Xinjufeng has not changed the purpose of repurchasing shares for a long time, ignoring the regulatory rules of the China Securities Regulatory Commission and the requirements of the "National Nine Articles"? As a listed company that has been in a state of breakage since the opening of the first day of listing, its market value has already been cut in half, what is the return it brings to investors? Xinjufeng will make a profit of 170 million yuan in 2022 and pay a dividend of 15.54 million yuan, with a dividend ratio of less than 10%. The profit for 2023 announced on April 24 will be 170.1 million yuan, with a dividend of 22.26 million yuan and a dividend ratio of 13%. The average annual dividend is less than 30%.
In 2023, Xinjufeng staged a merger and acquisition of snakes swallowing elephants, and at a price of HK$2.65 per share, it acquired 28.22% of the equity of domestic packaging giant Greatview Packaging from a subsidiary of Jardine Group, becoming the largest shareholder of Greatview Packaging. According to the prospectus of New Jufeng, the market share of Greatview Packaging is 12.3%, and that of New Jufeng is 7%. Obviously, the second brother bought the boss. The acquisition met with resistance from Greatview Packaging's management from the outset, and the deal was completed in September 2023.
Xinjufeng's intention to acquire Greatview Packaging is obvious, the opening stock price of the listing is the peak, and then it fell all the way down, falling below the issue price, Xinjufeng did not give those investors who supported his IPO returns, if the investors who participated in the subscription of new shares have been holding until now, they are facing huge losses. Xinjufeng is trying to increase its market share through mergers and acquisitions and boost confidence in the stock market. Therefore, during the merger and acquisition, they said that "they will not rule out further increasing their shareholdings in the future to enhance their control over Greatview Packaging".
As the largest domestic packaging leader, Greatview Packaging has been listed in Hong Kong for many years, and the management has not been selling and cashing out after the listing, and more importantly, there is a competitive relationship between Greatview Packaging and New Jufeng's customers, and Greatview Packaging will have the risk of losing customers after the merger, and they naturally have a diswelcome attitude towards the new Jufeng of their peers. After the completion of the transaction, New Jufeng proposed to Greatview in November 2023 to restructure its board of directors and nominated 5 people to join the board of directors of Greatview Packaging. The proposal was immediately met with resistance from Greatview Packaging's board of directors, as the entry of the nominee would weaken the control of Greatview Packaging's management.
The board of directors of Greatview Packaging refuted the directors nominated by New Jufeng on the grounds that one of the nominee directors is the fourth largest shareholder of New Jufeng, and that both New Jufeng and Greatview are engaged in aseptic packaging business, and that if the nominee is elected as a director of Greatview Packaging, he may have access to certain trade secrets and sensitive information of the company, and that one director is also a director of New Hope Liuhe, whose related parties are the main competitors of some of Greatview Packaging's major customers, and that the board of directors of Greatview is concerned that with the addition of this nominee to the board, the strategic relationship between the company and major customers will be further tightened, which may lead to a decrease in orders, which in turn will affect the company's earnings。
In addition to the many reasons for resistance to the nominee director, Greatview Packaging also publicly expressed that some customers have written to express their concern that Greatview Packaging is a leading international packaging supplier, and that with the acquisition of the equity of Greatview Packaging and the attempt to introduce the proposed directors, Greatview Packaging will lose its value as an international company, and after the completion of the equity acquisition, a bank has withdrawn its credit financing for Greatview Packaging. The Board of Directors of Greatview Packaging believes that the existing Board members already have extensive experience and ability to lead the Company, and if the proposed directors join the Board, the proportion of independent non-executive directors will be reduced from 43% to 33%, thereby reducing the independence of the Board and weakening the company's corporate governance, and the costs of the proposed directors joining the Board outweigh their benefits, and recommends that shareholders vote against the directors' proposals.
Greatview Packaging's concerns were supported by shareholders, who voted against more than 56% at the extraordinary general meeting at the end of January, and the directors' proposal representing the interests of Xinjufeng was not approved by the shareholders' meeting. If Xinjufeng sends directors with industry experience and even resources, then as a competitor in the same industry, it will inevitably make the management of Greatview Packaging and other investors feel uneasy, whether it is customer resources or trade secrets, there will be many uncertainties; The resistance of the board of directors of Greatview Packaging was supported by the vast majority of investors outside of Xinjufeng according to the voting results of the extraordinary general meeting in January.
Although Xinjufeng holds 28.22% of the equity of Greatview Packaging, the biggest difference between Hong Kong stocks and A-shares is that the defense of the rights and interests of minority shareholders in the Hong Kong stock market, as well as their resolute will of minority shareholders, will make decisions more favorable to them at critical moments.
The battle for control of the board of directors between Xinjufeng and Greatview has just begun. Whether it is from the stock price of Xinjufeng itself, or the stock price of Greatview Packaging, Xinjufeng follows the transaction of the subsidiary company of the old enterprise Jardine Matheson Group that came over from the Opium War, so that the Jardine Group has withdrawn from the high position, and at present, the new Jufeng's takeover transaction cannot give investors a satisfactory return, and those who have lifted the ban and hold more than 5% of the shares The major shareholders of the company are difficult to cash out in the case of breaking the net, and Xinjufeng has to boost the stock price through repurchase in the case of merger and acquisition of Greatview Packaging has not boosted the stock price, and in the case of sniping when entering the board of directors.
They will be worried that if Xinjufeng ignores the rights and interests of minority shareholders, so that the interests of investors who promote the success of the IPO are not protected, then how can they control the management of Greatview Packaging to ensure the rights and interests of minority shareholders?