A wave of share buybacks hits listed companies—these stocks may present opportunities (with list attached)

After the benchmark index plunged below 3,000 points on June 19, a surge of share purchases emerged: over 100 companies disclosed share purchase plans within three days. Recently, the index has fallen further—breaking below 2,800 points—sparking another wave of share buybacks among listed companies. “Buyback” vs. “Share Purchase by Major Shareholders”? A company’s share buyback typically occurs when the listed company believes its stock is undervalued. Shares repurchased are generally used for equity incentives or direct cancellation. A company cannot hold its own shares indefinitely; if repurchased shares are cancelled, the company’s registered capital decreases, thereby increasing earnings per share (EPS), book value per share, and reserve per share. Funds for buybacks come from the company’s own cash flow. A share purchase by major shareholders refers to such shareholders using their personal cash to acquire additional shares of their own company—thus increasing their ownership stake. Such purchases signal confidence in the company’s future prospects and effectively bolster investor confidence across all shareholder tiers. However, they do not affect the company’s share capital structure or financial structure—only the number of shares held by the major shareholder increases. Key differences: 1. Buyback funds originate from the company’s own cash flow; funds for major shareholder purchases come from the shareholders themselves—not from company funds. 2. Buybacks impact the company’s share capital structure, reducing registered capital and thereby indirectly boosting EPS, book value per share, and reserve per share. Higher EPS lowers the company’s P/E ratio and potentially increases shareholder returns—for instance, ROE and ROA may both improve. In contrast, major shareholder purchases merely reflect the shareholders’ view that the stock is undervalued—or stem from other personal motives—and confer no tangible benefit to the company itself. 3. From a medium- to long-term perspective, share purchases by major shareholders carry an added risk: the acquired shares may eventually be resold on the market, potentially exerting downward pressure on the stock price over time. Buybacks entail no such concern—the repurchased shares must be cancelled outright under the Company Law, effecting capital reduction and eliminating any future extraneous influence on the company’s development. 4. Following a buyback, securities regulations prohibit the company from conducting private placements (e.g., rights issues or follow-on offerings) for one year—thereby preventing dilution of shareholder returns through new share issuance. No such restriction applies to major shareholder purchases. Wave of Share Buybacks Among Listed Companies Data show that, as of this year, a total of 313 A-share listed companies have spent RMB 13.5 billion on share buybacks—the highest amount ever recorded. Since June, 84 companies have announced buyback plans or progress updates, involving nearly RMB 10 billion in total. Market performance: Since June, most of these 84 companies have seen their share prices decline rather than rise. Only six stocks posted gains during this period—including Blue Ocean HuaTeng (up 6.66%), Huaye Capital (up 6.06%), Jiahua Energy (up 5.93%), Baotong Technology (up 3.36%), Kaixin Yuan (up 2.81%), and *ST Dongling (up 1.58%)—all registering gains exceeding 1%, thus outperforming peers. Conversely, stocks including Zhonglai Co., Shengda Forestry, Huatie Co., Jieshun Technology, Cultural Great Wall, Weichuang Co., Jincheng Pharmaceutical, and Hongda Xingye all fell more than 30% during the same period—indicating severe overselling.

Review of M&A transactions in the chemical new materials sector in 2022

In April 2022, Deloitte China released its report, '2022 Global Chemical Industry M&A Outlook.' A survey of chemical industry executives revealed that, for two consecutive years, executives have expressed near-unanimous optimism regarding M&A prospects in 2022. In the post-pandemic year of 2022—marked by ongoing regional conflicts, soaring raw material prices, shrinking net profits, and intensifying competition—how did acquisition activity unfold in the new materials sector? Below is a brief review and summary. Celanese vs. DuPont On February 18, foreign media reported that Celanese, a global chemical industry giant, planned to acquire DuPont’s Mobility & Materials business unit for over USD 10 billion. This unit represents one of DuPont’s key strategic businesses, primarily producing polymers and resins for automotive and rail transportation applications. On October 13, it was reported that the European Commission had conditionally approved Celanese’s acquisition of DuPont’s Engineering Polymers division—Mobility & Materials—for EUR 11 billion. On November 1, DuPont completed the sale of the majority of its Mobility & Materials (M&M) business to Celanese Corporation—a global chemical and specialty materials listed company—for USD 11 billion. Celanese vs. KEP On April 2, Celanese officially announced the completion of its restructuring of Korea Engineering Plastics Co., Ltd. (KEP). Celanese had first announced the KEP restructuring in December 2020, with Celanese and Mitsubishi Gas Chemical (MGC) each holding a 50% stake in the company. Following the restructuring, KEP will focus exclusively on manufacturing and supplying high-quality products to its shareholders, while the shareholders will independently market those products globally—free from competitive restrictions. Celanese and MGC believe that KEP’s renewed focus on delivering leading innovative product portfolios to its shareholders constitutes a necessary response to globalization, supply-chain marketing decentralization, and other evolving industry dynamics. Avient vs. DSM On April 20, DSM announced it had reached an agreement with Avient to sell its Protective Materials business to Avient for an enterprise value of EUR 1.44 billion. The business comprises six production facilities, four R&D centers, and approximately 1,000 employees worldwide. Per the agreement, the transaction was expected to close in the second half of 2022. On September 1, Avient announced on its official website the successful completion of its acquisition of DSM’s Protective Materials business—including the Dyneema® brand—which has since been rebranded as Avient Protective Materials and integrated into Avient’s Specialty Engineered Materials business unit. Petronas Chemicals Group vs. Perstorp On May 17, Petronas Chemicals Group (PCG)—Malaysia’s national petrochemical group—announced that, on May 14, it had signed an agreement with a company owned by European private equity firm PAI Partners to acquire Swedish specialty chemicals leader Perstorp for an enterprise value of EUR 2.3 billion (approximately RMB 16 billion). On October 11, Perstorp was formally acquired by Petronas Chemicals Group (PCG), Malaysia’s leading integrated chemical supplier and a subsidiary of PETRONAS—the national oil company of Malaysia.

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