Sinolink Securities to Cancel 150M Yuan in Buyback Shares; More Brokerages Follow Suit

Overview

The "15th Five-Year Plan" explicitly proposes improving capital market functions to coordinate investment and financing. Industry analysts interpret this reform direction as aiming to build a virtuous cycle of "financing—investment—returns—reinvestment," ensuring that investors genuinely realize gains. Cancellation-based share buybacks are one of the most direct and tangible ways for listed companies to reward investors.

Recently, Sinolink Securities announced that it would change the purpose of its repurchased 17.3996 million shares from "maintaining company market value and shareholder rights" to "cancellation and reduction of registered capital." Within the year, Guotai Haitong, Zheshang Securities, and Huachuang Yunxin have completed the cancellation of repurchased shares, while two other securities firms have introduced full-cancellation plans.

Interviewed experts stated that cancellation-based buybacks directly enhance shareholder equity. The adjustment in the use of repurchased shares essentially represents an upgrade in buyback logic, signaling a shift in shareholder returns from "expectation management" to "substantive realization."

Plan to Cancel Shares Worth RMB 150 Million

On September 14, the board of directors of Sinolink Securities approved a proposal to change the use of repurchased shares. It plans to change the purpose of the 17.3996 million shares repurchased between June and August 2026 from "maintaining company market value and shareholder rights" to "cancellation and reduction of registered capital." This matter still requires approval by the shareholders' meeting.

Key details of the buyback:

• Initiation date: June 9, 2026
• Completion date: August 26, 2026
• Total shares repurchased: 17.3996 million (0.4696% of total share capital)
• Price range: RMB 8.16 – RMB 9.00 per share
• Total payment: Approximately RMB 150 million (excluding transaction fees)
• Shares proposed for cancellation: 0.4724% of current total share capital
• Post-cancellation total share capital: Reduced from 3.683 billion shares to 3.666 billion shares

Sinolink Securities stated: "Since 2023, we have implemented four rounds of buybacks, spending approximately RMB 510 million cumulatively, and have canceled repurchased shares three times." Cancellation-based buybacks are one of the most direct and tangible ways for the company to reward investors. Once repurchased shares are canceled, they permanently exit the company's total share capital, thereby increasing earnings per share (EPS) and net assets per share accordingly, resulting in a substantial improvement in existing shareholders' equity.

Broader Industry Trend

GF Securities is another representative case of share buyback cancellations within the securities sector. According to its investor relations activity record dated September 15, 2026, the company's shareholders' meeting approved the "Proposal on Changing the Use of Repurchased A-Shares and Their Cancellation" in February 2025. The meeting agreed to change the use of the already repurchased A-shares to "cancellation and reduction of registered capital," meaning the cancellation of all 15.24 million A-share repurchased stocks held in the company's dedicated securities account for buybacks, with a corresponding reduction in the company's registered capital.

Reporters found that since the beginning of this year:

• Completed cancellations: Sinolink Securities, Guotai Haitong, Zheshang Securities, Huachuang Yunxin
• Planned full cancellations: Zhongtai Securities, Hongta Securities

Expert Analysis

On the Significance of Cancellation-Based Buybacks

An industry insider who wished to remain anonymous told reporters that share cancellation causes repurchased shares to permanently exit the share capital. Assuming net profits remain unchanged, this can directly increase EPS and net assets per share, substantially enhancing existing shareholders' equity. Compared to short-term market cap support, this approach holds deeper value.

Chen Xingwen, Chief Strategy Officer at Heiqi Capital under Fengde Group, analyzed that Sinolink Securities' adjustment of buyback purposes reflects a positive shift in the shareholder return logic of listed companies. Changing the purpose of 17.3996 million shares from "maintaining company market value and shareholder rights" to "cancellation and reduction of registered capital" may appear superficially as merely a change in usage, but essentially represents an upgrade in buyback logic: cancellation is equivalent to the company using real money to reduce share capital and boost net assets and earnings per share. Shareholder returns are moving from "expectation management" to "substantive realization," which demonstrates market maturity.

Evolution of Securities Firms' Buyback Purposes

Chen Xingwen further analyzed the evolution:

| Phase | Buyback Purpose | Characteristics | |-------|----------------|----------------| | Early | Employee stock ownership plans or equity incentives | Internal governance tool; benefits flow to company team | | Later | "Maintaining market value" | Addresses short-term market fluctuations; defensive actions | | Current | Cancellation and capital reduction | Directly measurable value increments for all shareholders |

This evolution clearly answers the core question of "for whom do securities firms buy back shares": the ultimate goal of buybacks should be shareholder returns, not the tool itself. The progression from employee incentives to cancellation and capital reduction reflects a shift in corporate governance philosophy from internal-driven to shareholder-centric, which is also the natural implementation of the regulatory concept of "emphasizing returns" at the micro level.

Top-Level Design Context

From a top-level design perspective, compared to the "14th Five-Year Plan" focusing on strengthening the financing function of the capital market, the "15th Five-Year Plan" explicitly proposes improving the capital market's functions to coordinate investment and financing. The reforms aim to reverse the previous market imbalance of emphasizing financing over investment, building a virtuous cycle of "financing—investment—returns—reinvestment," and ensuring that investors genuinely realize gains.

How Securities Firms Can Enhance Investor Returns

Three Dimensions (Chen Xingwen)

1. Stable and transparent cash dividends – Provide investors with certain cash flows
2. Cancellation-based buybacks – Enhance the quality of each share; convey confidence when valuations are low
3. Professional research and wealth management services – Help investors truly obtain and hold returns

Only by combining these three aspects can returns transform from "numbers in announcements" to "gains in accounts."

Three Aspects (Industry Insider)

1. Rely on cancellation-based buybacks – Increase shareholder equity by shrinking total share capital, boosting EPS, net assets per share, and ROE
2. Raise the level of cash dividends – Maintain continuous and stable dividends; moderately increase dividend ratios
3. Improve operational quality and market cap management – Continuously improve fundamentals and profitability; promote reasonable alignment between performance and valuation

Judging Buyback "Sincerity"

How can ordinary investors judge the sincerity of listed securities firms' buybacks from announcements? The industry insider pointed out three key indicators:

1. Look for "True Cancellation"

• Cancelling repurchased shares is fundamentally different from retaining them for incentives or reselling them opportunistically
• Cancellation causes shares to permanently exit total share capital
• Under conditions of unchanged profits, it directly increases EPS and net assets per share
• Market interprets this as a purer form of shareholder return with the highest value feedback content
• In contrast, buybacks labeled as "maintaining market value" but retained for other uses, or even resold at high prices, offer limited actual contribution to existing shareholders

2. Examine Execution and Implementation

• Sincerity is shown in action rather than words
• High-quality cases often involve "announcing yesterday, buying today," completing cancellation promptly after buyback, and disclosing progress
• Conversely, merely issuing buyback announcements without actual purchasing actions for a long time, or delays in the cancellation process, likely indicates "paper sincerity"

3. Assess Continuity and Price Matching

• Multiple implementations of buybacks, continued promotion of cancellations, and buyback price ceilings higher than current market prices demonstrate the company's recognition of its own value and confidence in development
• Conducting cancellation-based buybacks against a backdrop of improved performance and low valuations creates solid value support
• Investors judging buyback value cannot rely solely on announcements; they must continuously track execution progress and company fundamentals, avoiding conclusions based on single announcements

The Three "Trues" for Investors

Chen Xingwen summarized the core of how investors can genuinely obtain investment returns in three "trues":

1. Real money – Are dividends and buybacks paid with real money rather than empty promises?
2. True intent – Is the buyback short-term market support or a long-term commitment? Does the change in purpose exhibit sustainability?
3. True effect – Did the company act decisively during low-valuation periods rather than putting on a show at high prices?

"Judging the sincerity of announcements cannot rely solely on single amounts; it requires looking at the repeatability of actions and their alignment with company strategy," Chen Xingwen pointed out. Sinolink Securities' change in buyback purpose this time precisely illustrates that it places the protection of investor interests within a long-term value framework, rather than treating buybacks as a one-off action.

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