CFIC Introduction
According to the brokerage research report, the "Guidelines" is the first guideline for market value management, which makes clear guidelines and requirements for the objectives, methods, implementation responsibilities and two types of key companies for the market value management of listed companies, marking the opening of the first year of market value management.
Recently, the China Securities Regulatory Commission drafted the "Regulatory Guidelines for Listed Companies No. 10 - Market Value Management (Draft for Comments)" (hereinafter referred to as the "Guidelines"), a total of 14 articles, clarifying the definition of market value management, clarifying the responsibilities and obligations of relevant entities, clarifying the special requirements of the two types of companies and clarifying the prohibitions. The key to the Guidelines is "investment value", "quality of listed companies" and "investor returns", and enhancing investment value is the market value management path to enhance investor returns. According to the brokerage research report, the "Guidelines" is the first guideline for market value management, which makes clear guidelines and requirements for the objectives, methods, implementation responsibilities and two types of key companies for the market value management of listed companies, marking the opening of the first year of market value management. Liu Yang, secretary of the board of directors of Leyard, told Xinhua Finance that as of the end of 2023, Leyard had accumulated cash dividends of 1.435 billion yuan (including 257 million yuan of repurchased shares), of which the proportion of cash dividends from 2019 to 2023 exceeded 20% of the net profit attributable to the parent company. The "Guidelines" start the first year of market value management, and the "Guidelines" require listed companies to use mergers and acquisitions, equity incentives, cash dividends, investor relations management, information disclosure, share repurchase and other methods to promote the investment value of listed companies, and make special requirements for major index constituent companies to disclose market value management systems, long-term net breaking companies to disclose valuation improvement plans, etc. The Guidelines contain a total of 14 articles, including four aspects: clarifying the definition of market value management, clarifying the responsibilities and obligations of relevant entities, clarifying the special requirements of the two types of companies, and clarifying the prohibited matters. Listed companies are required to improve the quality of listed companies on the basis of improving the quality of listed companies, improve operational efficiency and profitability, and use mergers and acquisitions, equity incentives, cash dividends, investor relations management, information disclosure, share repurchase and other methods in accordance with the actual situation in accordance with laws and regulations to promote the investment value of listed companies. "Investment value", "quality of listed companies" and "investor returns" are the key, and it is clear that listed companies should improve their own quality, and use various methods to promote the investment value of listed companies to fully reflect the quality of listed companies, so as to enhance investment value and enhance investor returns. A total of 14 "investment value", 7 "quality of listed companies" and 4 "investor returns/benefits" appear in the full text of the Guidelines, which together form the core logic of market value management. In order to achieve this goal, listed companies need to "promote the cultivation and application of new quality productivity, promote the improvement of operation level and development quality, and on this basis, do a good job in investor relations management, enhance the quality and transparency of information disclosure, and actively take measures to boost investor confidence when necessary, and promote the investment value of listed companies to fully reflect the quality of listed companies". According to the research report of Galaxy Securities, the market value management of the mainland is based on the theory of overseas value management and combined with the actual situation of the Chinese market to form a management model with Chinese characteristics. Since the concept of market value management was proposed, it has been developed for more than 20 years, and has gone through several stages from concept germination and theoretical exploration, to system construction, and then to scientific refinement.
Image source: Galaxy Securities
"The "Guidelines" is the first guideline for market value management, which has made clear guidelines and requirements for the objectives, methods, implementation responsibilities and two types of key companies of listed companies, and the first year of market value management." Xie Xuecheng, an analyst at Galaxy Securities, said. Since the beginning of this year, the relevant departments have repeatedly pointed out the topic of "market value management", such as the SASAC said at a press conference on January 24 that it will include the effectiveness of market value management in the assessment of the person in charge of the central enterprise; On January 29, at the assessment and distribution work meeting, it was further proposed to promote the full implementation of the "one enterprise, one policy" assessment in 2024, and comprehensively promote the market value management assessment of listed companies. In addition to emphasizing once again "studying the market value management of listed companies into the internal and external assessment and evaluation system of enterprises", the third "National Nine Articles" issued on April 12 also clearly proposed to "formulate guidelines for the market value management of listed companies". Under the requirements of the "New National Nine Articles", the "Guidelines" were issued to further guide listed companies to pay attention to their own investment value and effectively improve investor returns. As a top-level design document of the domestic capital market once every decade, one of the core purposes of the "National Nine Articles" is to promote the high-quality development of the capital market, and improving the market value level of listed companies is one of the most direct and effective means to develop and expand the capital market. The Oriental Wealth Securities Research Report also shows that improving investment value has become the top priority of market value management, and the requirements for information disclosure and the use of capital market tools of listed companies have been increased. The core objective of the Guidelines is to promote the investment value of listed companies, and the measures taken can be divided into two categories. The first is to convey the company's value signal to the market, such as doing a good job in investor relations management, information disclosure, etc., so that the market can accurately assess the company's value, and promote the investment value of listed companies to fully reflect the company's quality. The second is to take the initiative to use capital market tools to improve the quality of listed companies while correcting the capital market's cognitive errors on the company's value, such as comprehensively using additional issuance, mergers and acquisitions and other tools to enhance and strengthen the company's core profitability, boost investor confidence through repurchases, increase holdings, dividends and other means, and improve the quality of the company's development by means of equity incentives and employee stock ownership. The communication and interaction between listed companies and capital market participants is conducive to promoting the investment value of listed companies and truly reflecting the quality of listed companies. Listed companies need to establish a good communication and trust relationship with other participants in the capital market, eliminate the information asymmetry between the company and the capital market participants, and make the quality of listed companies recognized by the capital market. The Guidelines also require board secretaries, directors and senior executives of listed companies to strengthen information disclosure and investor relations. "In 2023, the company will strictly fulfill its information disclosure obligations in accordance with relevant laws and regulations, as well as the relevant requirements of the "Information Disclosure Management System" and other rules and regulations. In 2023, the company held a total of 4 shareholders' meetings, 13 meetings of the board of directors and 8 times of the board of supervisors, and disclosed a total of 175 announcement documents throughout the year, totaling about 1,925,600 words. Liu Yang, secretary of the board of directors of Leyard, told Xinhua Finance. According to the data, as of the end of 2023, Leyard has accumulated cash dividends of 1.435 billion yuan (including 257 million yuan of repurchased shares) since its listing, of which the total cash dividends from 2019 to 2023 are 682 million yuan (including 127 million yuan of repurchased shares), and the cash dividend ratio in each year during the four-year period exceeds 20% of the net profit attributable to shareholders of listed companies. In addition, since 2018, the company has completed two repurchases, with a total of 35,669,800 shares repurchased and a total of 257 million yuan of its own funds. Among them, two repurchases were implemented on December 17, 2018 and January 29, 2021, with repurchase amounts of 182 million yuan and 75 million yuan respectively, with a total of 24,465,200 shares and 11,204,600 shares. On March 11, 2024, the company disclosed the implementation of the third repurchase plan, with a total amount of funds to be repurchased of not less than 30 million yuan and no more than 60 million yuan, and the amount of repurchase has been 22.4 million yuan so far, and 4.888 million shares have been repurchased.
Source of this article: Xinhua Finance
Author: Kang Gengfu Dong Daoyong
WeChat editor: Gu Shuxu
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