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source: china securities

amid the turmoil over the "biosafety act", wuxi apptec launched its third repurchase this year.

on september 11, wuxi apptec announced that it had repurchased 522,300 shares through centralized bidding for the first time. the previous evening, the company said it planned to repurchase shares with its own funds, with a total amount of 1 billion yuan and a repurchase price of no more than 61.02 yuan per share, to maintain the company's value and shareholders' rights.

it is worth mentioning that this is wuxi apptec's third 1 billion yuan a-share cancellation repurchase plan this year. prior to this, wuxi apptec completed the first two repurchase plans on february 5 and may 22, respectively, and repurchased a total of 2 billion yuan of a-shares.

as of the close of september 11, wuxi apptec closed at 38.54 yuan per share, with a total market value of 109.5 billion yuan.

first repurchase of 522,300 shares

on the evening of september 11, wuxi apptec issued an announcement that the company reviewed and approved the "proposal on the third repurchase of the company's a-shares by centralized bidding transactions in 2024" on september 10, 2024, agreeing that the company will use its own funds to repurchase the company's a-shares by centralized bidding transactions. the total repurchase amount is rmb 1 billion, and the repurchase price shall not exceed rmb 61.02 per share (inclusive). the repurchase period shall not exceed 3 months from the date of approval of the plan by the board of directors.

the announcement shows that on september 11, 2024, the company repurchased shares for the first time through centralized bidding transactions. the number of repurchased shares was 522,300 shares, accounting for 0.0179% of the company's total share capital, and the total amount of funds used was rmb 20.0077 million (excluding transaction fees).

regarding the purpose of the repurchase, wuxi apptec stated that in order to maintain the company's value and shareholders' interests and enhance investor confidence, the company plans to use its own funds to repurchase shares, taking into account factors such as the company's financial situation, future development and reasonable valuation levels, to promote the company's stock market price to match its intrinsic value.

according to wuxi apptec's announcement, as of june 30, 2024 (unaudited), the company's total assets were rmb 74.397 billion, net assets attributable to shareholders of the listed company were rmb 54.714 billion, and current assets were rmb 30.261 billion. the funds for this share repurchase accounted for approximately 1.34% of the company's total assets as of june 30, 2024, 1.83% of the net assets attributable to shareholders of the listed company, and 3.30% of current assets. based on the above financial data, combined with the company's stable operation and risk control, the company believes that this share repurchase will not have a significant impact on the company's operations, finances and future development.

wuxi apptec emergency announcement

it is worth mentioning that since the beginning of this year, affected by the draft legislation of the us biosafety act, wuxi apptec's share price in the secondary market has been "falling continuously". as of september 11, wuxi apptec's a shares closed at 38.54 yuan per share, down more than 45% this year, with the latest total market value of 109.5 billion yuan.

on september 10, the u.s. house of representatives passed the biosecurity act by 306 votes to 81 on september 9, local time. the bill restricts the u.s. federal government from doing business with some biotechnology providers on the grounds of "national security." in response, wuxi apptec announced on the hong kong stock exchange on the morning of the 10th that the draft legislation passed this time was based on the version previously voted by the house oversight and accountability committee on may 15 (u.s. time), which included designating wuxi apptec as a "biotechnology company of concern." the company strongly opposes this presumptive and unreasonable designation without due process.

the bill would restrict the use of u.s. government funds, loans, or grants to perform certain biotechnology equipment or services provided by designated companies in the performance of government-funded contracts. despite this restriction, the bill also includes a non-retroactivity provision that allows designated companies to continue to perform u.s. government-funded contracts for their customers until 2032.

"we firmly believe that wuxi apptec has not, does not, and will not pose a national security risk to the united states or any other country in the past, and the company has never been subject to any sanctions by u.s. government agencies. the company also reiterates that wuxi apptec has no human genomics business, and its existing businesses do not involve the collection of human genomic data in the united states, china, or any other region," wuxi apptec said.

wuxi apptec said that the proposed draft biosafety act will continue to go through the legislative process in the coming months. for the proposed draft legislation to become law, it must be approved by the senate and reconciled with any differences with the version passed by the house of representatives before the end of the current 118th congress. currently, the senate has not scheduled a review of the proposed draft biosafety act, and the direction of its legislative process is unclear. the company will work with consultants to continue to communicate and dialogue with relevant parties involved in the legislative process.

in terms of performance, wuxi apptec's semi-annual report shows that in the first half of the year, wuxi apptec achieved revenue of approximately rmb 17.241 billion, a year-on-year decrease of 8.64%; net profit attributable to the parent company was approximately rmb 4.240 billion, a year-on-year decrease of 20.20%. this is also the first time in the past five years that the company's semi-annual report performance has declined.

listed companies have repurchased more than 130 billion yuan this year

recently, many listed companies have announced large-scale repurchase plans. in september alone, 48 listed companies, including wuxi apptec, huayi group, weige chuangxin, zhongshun jierou, and dabao medical, announced repurchase plans.

specifically, on the evening of september 10, dabao medical announced that the company intends to use its own funds to repurchase some of the company's shares through centralized bidding transactions, with the repurchase price not exceeding 35 yuan per share (inclusive), and the proposed repurchase amount is not less than 100 million yuan (inclusive) and not more than 200 million yuan (inclusive). the repurchased shares will be used to implement the equity incentive plan. the repurchase period is within 12 months from the date the board of directors deliberates and approves this share repurchase plan.

weige chuangxin announced that the company's board of directors reviewed and approved a proposal to use no less than 100 million yuan (inclusive) and no more than 150 million yuan (inclusive) of its own funds to repurchase the company's shares through centralized bidding transactions for employee stock ownership plans or equity incentives. the share repurchase plan complies with relevant regulations, is conducive to enhancing investor confidence, and improves the company's long-term incentive mechanism.

from the perspective of the purpose of repurchase, most companies repurchase for the purpose of cancellation and reduction of registered capital. industry insiders generally believe that cancellation-style repurchase is regarded as the most favorable repurchase method for investors. on the one hand, cancellation-style repurchase can better demonstrate the company's high recognition of its own value and its full confidence in its future development prospects; on the other hand, after the share repurchase and cancellation, the company's share capital will be reduced. under the condition that the current profit and dividend ratio remain unchanged, financial indicators such as earnings per share, return on net assets per share, and dividends per share will increase, which will theoretically help increase distributable profits per share and improve investor returns. therefore, the role of cancellation-style repurchase in helping the capital market stabilize and recover is more obvious.

wind data shows that as of september 11, a total of 1,916 listed companies have implemented repurchases this year, with a total repurchase amount of 136.5 billion yuan, a record high.

in terms of the repurchase amount, among the companies that have implemented repurchases this year, 11 have repurchased more than 1 billion yuan. among them, hikvision has repurchased 2.894 billion yuan, wuxi apptec has repurchased 2.02 billion yuan, sanan optoelectronics has repurchased 1.99 billion yuan, catl has repurchased 1.951 billion yuan, and tongwei co., ltd., baosteel co., ltd., sf holding, asymchem, jiuan medical, hebang bio, and will semiconductor have repurchased more than 1 billion yuan.

editor: wan jianyi

proofreading: yang shuxin

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