Buying back stocks that would be bad for long-term shareholder value
Midea Group’s stock repurchase is a source of thirst quenching: Beijing Business Daily Zhou Kejingmei’s group announced that it would buy back more than 80 million shares, and the company’s stock is currently near 46 yuan. The net net asset corresponding to the quarterly report is about 12
03 yuan, this column believes that if the repurchase is successful, Midea Group’s net assets will be significantly 四川耍耍网 reduced, which is not good for long-term shareholder value, which is a behavior of drinking and quenching thirst.
The transaction market shows that during the period from June 13 to July 4, Midea Group ‘s breakthrough range fell by more than 20%. At this time, Midea Group launched a large-scale repurchase program of 4 billion U.S. dollars.The purchase of more than 80 million company shares clearly has the essence of maintaining the company’s stability.
If calculated at 46 yuan to buy 80 million shares, Midea Group needs about 36 to complete the repurchase.
800 million cash.
Assuming the repurchase is successful, Midea’s latest net asset value will be 792 from a quarterly report.
2.6 billion fell to 755.
4.6 billion US dollars (excluding the effects of equity incentives after March 31 and the listing of additional corporate shares, the same below), the total share capital will be 65.
745.4 billion shares fell to 64.
945.4 billion shares, the static net assets will be from 12.
03 yuan fell to 11.
It can be seen that, because Midea Group is constantly improving, and some of the company ‘s net assets have exceeded previous mergers, the more shares Midea Group is gradually repurchasing, the more unfavorable the impact on shareholders ‘net worth.
This is also the main reason that this column believes that Midea Group’s repurchase of stocks is a way to quench thirst.
So why are investors happy to see Midea Group buy back its shares?
Absolutely in the short term, the huge US $ 4 billion repurchase program has indeed boosted Midea Group.
For example, in the case of a weak market on July 5, Midea Group’s closing was still able to increase against the trend2.
At the same time, Midea Group’s repurchase of shares is more beneficial to investors to a certain extent than cash dividends.
If Midea Group does not repurchase shares, it will take these 36.
800 billion US dollars in cash for cash dividends, and then investors use the dividends to buy Midea Group shares. This logically has the same effect as Midea Group’s repurchase of shares. The difference is that repurchasing shares prevents investors from payingDividend tax.
In fact, in this column, Midea Group does not need to buy back stocks for maintenance. At present, Midea Group has better profits and growth. Naturally, this type of outstanding performance stock will naturally be favored by investors.There is support.
Even the irrational decline caused by the broader market drag will quickly achieve a reasonable return to the estimate after the broad market has stabilized.
In addition, in the long run, Midea Group is still in a relatively high range, which is part of the high price.
Compared with those “horrible” stocks, Midea Group is still the darling of many investors. If Midea Group needs to repurchase shares for maintenance, are those steels and bank stocks that exceed the combined net asset value more repurchaseWhat about stocks?
For example, Hesteel has a net asset of up to 4.
25 yuan, but maybe only 2.
81 yuan, if it can spend huge sums of money to buy back stocks, it is really great.