Multiple Chinese brokerages announce share buybacks for cancellation to boost shareholder returns

Red Star Capital Bureau | September 22 — Since mid-September, a number of securities firms have successively disclosed share buyback plans or progress updates.

On September 18, Zhongtai Securities (600918.SH) reported the latest progress of its buyback, completing the first repurchase of 1.2068 million shares through centralized竞价 trading, accounting for 0.02% of its total share capital.

Over the past week, several listed securities firms—including Zhongtai Securities, Guojin Securities (600109.SH), and Hongta Securities (601236.SH) —have issued buyback plans or progress announcements. In terms of scale, the repurchase amounts generally range from RMB 50 million to RMB 300 million, with the stated purpose being share cancellation and capital reduction.

Multiple Securities Firms Act Intensively; Buybacks Mostly for Cancellation and Capital Reduction

In just the past week, three securities firms announced share buyback plans or progress updates.

• Zhongtai Securities announced on the evening of September 18 that it had completed its first share repurchase via centralized bidding on the same day, buying 1.2068 million shares (0.02% of total share capital). The highest purchase price was RMB 5.49 per share, the lowest was RMB 5.44 per share, and the total amount paid was RMB 6.6041 million. The buyback is intended for capital reduction.

• Hongta Securities released a buyback report on September 17, planning to use RMB 50 million to RMB 100 million of its own funds to repurchase shares, with a maximum repurchase price of RMB 10.53 per share. All repurchased shares will be cancelled to reduce registered capital.

• Guojin Securities announced on September 15 that it plans to change the purpose of 17.3996 million shares repurchased between June and August 2026 to "cancellation and reduction of the company's registered capital." These shares cost no less than RMB 150 million and no more than RMB 300 million, representing 0.4724% of the company's total share capital. If approved by the shareholders' meeting, Guojin Securities' total share capital will shrink from 3.683 billion shares to 3.666 billion shares.

According to multiple listed securities firms' announcements, the reasons for this round of buybacks are generally based on confidence in the company's future sustainable and stable development, recognition of the company's long-term value, the desire to protect investor interests, and the aim to enhance the company's long-term investment value and boost investor confidence.

Additionally, GF Securities disclosed in its investor relations activity record on September 15 that its shareholders' meeting approved a proposal in February 2025 to change the purpose of repurchased A-shares to "cancellation and reduction of registered capital," i.e., cancelling all 15.24 million A-shares in the company's dedicated buyback securities account and correspondingly reducing the company's registered capital.

According to incomplete statistics by Red Star Capital Bureau, Guotai Haitong, Zheshang Securities, and Huachuang Yunxin have all completed the cancellation of repurchased shares this year.

Industry Insight: Can Improve Long-Term Investment Value

It is noteworthy that an increasing number of securities firms are choosing to directly cancel repurchased shares rather than retain them for employee incentives or opportunistic sales. What is the logic behind this? What are the advantages of cancellation-style buybacks?

Wang Hongying, President of the China (Hong Kong) Financial Derivatives Investment Research Institute, told Red Star Capital Bureau that listed companies repurchasing shares and directly cancelling them is a method some enterprises use for valuation repair. Direct cancellation can increase earnings per share, reward shareholders, and boost the company's value in the short term.

The value of this measure is reflected in two main aspects:

1. Policy alignment: It aligns with the "New Nine National Guidelines" policy direction of enhancing shareholder returns. Share cancellation can thicken shareholders' implicit return on investment.
2. Structural optimization: It can optimize the company's equity structure, enhance shareholder return value, and support the company's long-term stable development.

Wu Suwei, a securities firm private wealth manager, told Red Star Capital Bureau that policy guidance is a key factor. The New Nine National Guidelines explicitly guide listed companies to cancel repurchased shares, which can increase earnings per share and net assets, and enhance the equity of existing shareholders. Therefore, cancellation-style buybacks are considered the most direct way to reward investors, thereby improving the company's long-term investment value.

Secondly, the sector's long-term valuation remains low. Using自有 funds to buy back and cancel shares is equivalent to recovering equity at low prices. If shares were retained for equity incentives, there would be future selling pressure and the need to consider timing, which could impact the stock price.

However, Wu Suwei emphasized, "This is an optimization at the equity level, but it is also constrained by the securities firm's net capital system. The advantages are limited, so there is no need to over-mythologize it."

Red Star News Reporter: Xiao Shiqing Editor: Guo Zhuang Reviewer: Feng Lingling