After more than 3 years, SMIC repurchased its shares again.

On the evening of May 19, SMIC’s H-share announcement stated that it had repurchased 4.215 million ordinary shares of the company through the Hong Kong Stock Exchange on May 19, at a cost of HK$66.57 million.

Since the end of April, SMIC’s AH shares have recovered. At the close on May 19, its A shares reported 42.44 yuan per share, and its H shares reported 15.88 Hong Kong dollars per share.

Respond to market concerns

A reporter from China Securities Journal noticed that when the stock price continued to pull back in the previous period, some investors asked SMIC whether there was a repurchase plan through the “SSE e-interaction” platform.

SMIC replied on January 6 that the 2021 annual general meeting authorizes the board of directors to repurchase no more than 10% of the company’s issued Hong Kong shares on that day, which will be valid until the end of the company’s 2022 annual general meeting. If the company has an arrangement for stock repurchase, it will fulfill its obligation of letter disclosure in a timely manner in accordance with relevant authorizations and regulations.

On May 6, SMIC replied again that according to the relevant regulations of the Hong Kong Stock Exchange, the company is currently in a silent period and does not have the conditions to implement repurchase.

On May 19, SMIC took action. According to the announcement, the company repurchased 4.215 million ordinary shares through the Hong Kong Stock Exchange on the same day at a cost of HK$66.57 million.

The number of completed repurchases mentioned above is still quite far from the repurchase scale authorized by SMIC’s annual general meeting to authorize the company’s board of directors, but there is not much time left for the validity period of the authorization. According to the practice in recent years, SMIC will hold its annual general meeting in late June. Of course, if the company wants to continue the repurchase after the expiration of the aforementioned authorization, SMIC can submit a repurchase proposal at the next general meeting of shareholders.

It is worth mentioning that the last repurchase by SMIC dates back to more than three years ago. According to the prospectus, from September 2018 to October 2018, SMIC repurchased 18.941 million ordinary shares of the company on the Hong Kong Stock Exchange, and cancelled this part of the repurchased ordinary shares in the same year.

Plenty of funds on hand

According to the regulations, the funds for SMIC’s repurchase must come from the company’s distributable profits.

According to the Chinese Accounting Standards for Business Enterprises, as of the end of the first quarter, SMIC’s undistributed profit was 21.6 billion yuan, an increase of 13.6 billion yuan from the end of 2020.

As for the absence of dividends in 2021, the independent non-executive directors of SMIC believe that the company’s current operating conditions, capital expenditure needs, future development and other factors are mainly considered, which is in line with the company’s long-term development needs and shareholders’ long-term interests, as well as in compliance with relevant laws and regulations , normative documents and the provisions of the company’s profit distribution policy, there is no situation that harms the interests of the company and its shareholders, especially the interests of small and medium shareholders.

SMIC has plenty of funds on hand. As of the end of the first quarter, the company’s monetary capital balance reached 80.6 billion yuan. However, SMIC is building new fabs in Beijing, Shanghai and Shenzhen, and the demand for capital is large. This year, SMIC’s capital expenditure plan is about $5 billion.

Zhao Haijun, co-CEO of SMIC, said at the first-quarter performance briefing that this year’s capital expenditures and production expansion will proceed as planned. At the end of the year, the total increase in production capacity this year will exceed that of last year.

Zhao Haijun said that the stock markets such as consumer electronics and mobile phones have entered the stage of destocking, while the incremental markets such as high-end Internet of Things, electric vehicles, displays, green energy, and industry have not yet established sufficient stocks. higher and more pressing requirements.

This article is reprinted from: https://news.futunn.com/post/15715998?src=3&report_type=market&report_id=206162&futusource=news_headline_list
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