BYD Chairman and President Wang Chuanfu has doubled the proposed amount for the company’s share buyback on China’s A-share market, following an initial offer late last year that failed to halt a decline in the stock price.
A new letter from Wang, received by BYD (SHE: 002594) on February 22, proposes increasing the share buyback to RMB 400 million ($55.6 million) from the previously announced RMB 200 million. The purpose is to reduce registered capital, according to the company’s exchange announcement.
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Wang’s initial proposal on December 6, 2023, suggested a RMB 200 million buyback of shares traded in Shenzhen, with the repurchased shares intended for an employee share ownership plan, a share incentive plan, or to reduce registered capital, as per a prior announcement.
Since the initial proposal, there has been no announcement of progress on the share buyback from BYD.
BYD’s shares have declined by 7 percent since December 6 last year, in contrast to the Shanghai Composite Index’s 1 percent gain and the Shenzhen Composite Index’s 4 percent fall over the same period.
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Wang’s increased proposal reflects his confidence in the new energy industry’s prospects, the company’s future development, and his recognition of its value, BYD said in today’s announcement.
The move aims to safeguard the interests of all shareholders, enhance investor confidence, and stabilize and enhance the company’s value.
Wang’s proposed share repurchase method involves centralized bidding transactions, with the repurchased shares priced not higher than 150 percent of the average trading price in the 30 trading days before the board of directors approves the plan.
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Funding for the repurchase will come from the company’s own funds, with the repurchase period set within 12 months from the date of the shareholders’ general meeting approving the program.
BYD recorded robust sales growth in 2023, selling 3,024,417 new energy vehicles (NEVs), a 62.3 percent increase year-on-year.
However, its Shenzhen-traded shares fell by 23 percent for the full year 2023, amid China’s macroeconomic challenges. The Shanghai Composite Index fell by 3.7 percent, and the Shenzhen Composite Index lost 13.5 percent in 2023.
