Tencent started the "strongest repurchase" in the past ten years. Why is the market regarded as the "bottom" vane?

time:2022-12-09 09:20:00source:chakarski.com author:Stock market
Tencent started the "strongest repurchase" in the past ten years. Why is the market regarded as the "bottom" vane?

Tencent's repurchase has reached nearly 17 billion, and the continuous large-scale repurchase at a low stock price, coupled with the substantial increase of overseas asset management giants, means that Tencent is going to "bottom out"? Under Tencent's "record" repurchase, funds began to hunt for the bottom. Since the beginning of this year, under the turbulent global economic situation and the siphon effect of hundreds of billions of IPOs, the Hong Kong stock market has continued to decline. Tencent, which has the largest market value, took the lead in opening the largest buyback wave in the history of Hong Kong stocks. The latest data on September 16 shows that Tencent Holdings repurchased another 1.18 million shares, costing about 351 million Hong Kong dollars, with a repurchase range of 295.2 Hong Kong dollars to 299 Hong Kong dollars. The sum of ten years. On the same day, overseas asset management giant Fidelity International also announced the latest position data. Two of its Chinese stock funds have comprehensively increased their positions in Hong Kong technology stocks that have recently been repurchased in large amounts, especially in Tencent Holdings. 60%. Will Tencent's continuous repurchase since August become a "bottom" signal? Who is buying the bottom of Tencent? In addition to Duan Yongping, who has increased positions for the fourth time, existing institutions have quietly begun to deploy Tencent. During August, China Focus Fund, a subsidiary of Fidelity International, increased its holdings of 6.36% of its holdings in Tencent Holdings, with a stock market value of US$417 million at the end of the period. As of the end of August, the fund's largest holding stock is another larger fund under Tencent Holdings and Fidelity International, China Consumer Power, which has fully increased its positions in the Internet sector in August. As of the end of August, Tencent Holdings’ holdings were increased by 6.36% by the fund, and the market value of the holdings was US$417 million, making it the fund’s largest holding. Statistics show that Fidelity International was established in 1969 and is one of the largest active asset management institutions in the world. It has more than 20 years of investment experience in China. As of December 31, 2021, Fidelity International's assets under management for more than 2.7 million customers worldwide reached US$812.8 billion (equivalent to RMB 5.17 trillion). In addition to asset management giants speeding up bargain hunting, Southbound Capital has recently been aggressively "sweeping goods". Choice data shows that in August, Tencent’s cumulative net purchases reached HK$7.2 billion. As of September 15, Southbound funds have net bought Tencent Holdings for 15 consecutive days, with a total purchase of about 4.18 billion Hong Kong dollars. Southbound funds’ holdings in Tencent also reached a record high. According to sorting out, at the historical high point of Tencent's stock price in 2021, Nanxia Fund will only hold 533 million shares of Tencent, accounting for 5.55% of the company's total share capital. As of the close on June 16, Nanxia Fund held 732 million shares of Tencent, accounting for 7.6% of the company's total share capital, an increase of 2.1 percentage points. In addition to direct holdings, many institutions or individuals are increasing their positions in Hong Kong technology stocks through ETFs. For example, as of the end of June this year, Yang Zugui held 117 million Dacheng Hang Seng Technology ETF, 57.4458 million Bosera Hang Seng Technology ETF and 193 million Huatai Pineapple Southern Orient Hang Seng Technology ETF, ranking first and second among the above three ETFs. and the fifth largest holder; at the same time, it also holds 92.6483 million copies of E Fund China Prospective Internet 50ETF, ranking the tenth largest holder of the fund. It is worth noting that Yang Zugui did not appear in the list of the top ten holders of the above four funds at the end of last year. It shows that Yang Zugui is increasing the layout in the adjustment and repurchase of Hong Kong stock technology stocks in the first half of this year. Coincidentally, Liang Junqiang, the largest holder of Huaan Hengsheng Technology ETF, held 124 million shares by the end of the first half of the year, a significant increase from the end of last year. It also deployed 350 million Huaxia Hengsheng Technology ETFs. In terms of institutions, at the end of the second quarter, among the top ten holders of Hwabao CSI Hong Kong Stock Connect Internet ETFs, there were tens of billions of private equity Yingshui Investments. Yingshui Investment's products held 50 million shares, holding The share remains unchanged from February 11, and it is still the largest holder of the listed fund. During the same period, the products of Gao Yi Asset also appeared in the list of the top ten holders of the Hang Seng Medical ETF for the first time. As of the end of the second quarter, its holding share was 92.54 million. The opportunity and background of the strongest repurchase increase in history is that Hong Kong stocks set off the largest repurchase wave in history. As of September 16, a total of 185 Hong Kong-listed companies had repurchased more than HK$54 billion during the year, a year-on-year increase of about 140%, setting a new record for Hong Kong stocks in the past 20 years. Among them, Tencent is the well-deserved "repurchase king", with operations exceeding HK$16 billion during the year, accounting for 30% of the total market repurchase scale. Industry insiders believe that the main reason for the repurchase of Hong Kong-listed companies is that the stock value is undervalued. Tencent also emphasized in the previous performance meeting that the company's stock price is "severely undervalued". Among the Hong Kong-listed companies that have repurchased this year, more than 80% of the companies have shown a downward trend in their share prices since the beginning of the year. Among them, the stock prices of more than 70 companies have fallen by more than 30% during the year. For Tencent, the stock price has not improved in the past month, but the repurchase rate has been accelerating. Since August 19, Tencent has repurchased for 20 consecutive trading days, with a total amount of 7.01 billion Hong Kong dollars, almost 300 million per day. This year, it has repurchased 58 times, a total of 48.917 million shares, and the repurchase amount exceeds 16 billion Hong Kong dollars, which is equivalent to 6 times the repurchase amount last year (2.6 billion Hong Kong dollars), and has exceeded the total number of shares repurchased over the years. How many repurchases are on the way in the future? On September 8, Naspers, the main shareholder of Tencent, announced the sale of 1.115 million shares of Tencent, reducing the shareholding ratio to 27.99%. If the average price is calculated at HK$300, it will cash out about HK$300 million. According to statistics, since the beginning of this year, Naspers has accumulated more than 3.9 million shares of Tencent. Earlier in the day, Prosus said in an announcement that, as part of the continued implementation of the repurchase program, the company has taken administrative measures to deposit an additional 192 million Tencent shares it holds into the Hong Kong Central Clearing and Settlement System in the form of certificates. , the latest market value of this part of the stock is close to 60 billion Hong Kong dollars. Some analysts believe that the main purpose of Naspers Group's stock repurchase program is likely to solve the serious inversion of its market value and asset value. In its official statement, it said: "The launch of the share repurchase program aims to unlock greater value for shareholders. At the same time, it will also rebalance the Naspers Group's asset base towards rapidly growing non-Tencent assets." Buyback and share price The effect of repurchase and cancellation is to increase the growth rate of earnings per share, improve market confidence, and increase shareholder returns. The number of outstanding shares has decreased, financial indicators such as earnings per share, dividends per share, and net assets per share have been improved, and shareholders' equity has also increased indirectly. From the perspective of investors' rights and interests, the repurchase of Hong Kong and US stocks is more favorable than that of A shares. According to the regulations of the exchange, the shares repurchased by listed companies in Hong Kong and US stocks must be cancelled. The Industrial Securities Research Report believes that since 2008, the Hong Kong stock market has experienced a total of five complete repurchases, all of which occurred when the market has fallen sharply and the valuation has reached a low level. The price of the Hang Seng Index is negatively correlated with the number of company repurchases. Large-scale company repurchases often indicate a staged bottom, and the follow-up is accompanied by a wave of rising prices. Tianfeng Securities pointed out that large companies are more inclined to repurchase: Since the second half of 2021, the number of stock repurchases in the Hong Kong stock market and China stock market has increased significantly. Yes: 1) The repurchase quota may be greatly increased according to the company's assessment of the underestimation of the market value and the degree of book cash; 2) From the perspective of the actual execution speed of the plan, the repurchase rate of large-cap companies is significantly faster than that of small-cap companies due to their better cash flow capabilities. market capitalization company. In Tencent's repurchase history, the stock price usually performed flat during the repurchase period, and after half a year or a year after the repurchase, the stock price often rebounded sharply, so it was regarded by the market as a "low stock price" vane. Data shows that Tencent repurchased stocks of varying sizes every year from 2005 to 2014, with a total repurchase of HK$4.338 billion in 10 years. The repurchase is suspended for the next three years. In 2018, a larger round of repurchase will be restarted. In 2018, 2019, and 2021, the repurchase was HK$887 million, HK$1.161 billion, and HK$2.6 billion respectively, with a total of HK$4.646 billion, exceeding the previous total. However, in the past three years, a round of repurchase has been carried out every year, lasting about 30 days, and the scale has continued to expand. According to market sources, Tencent grants employees the ability to buy Tencent Holdings at HK$384.08 per share in the next seven years, and the employee's income is the difference between the actual stock price and the exercise price. It means that the current Tencent repurchase is also a signal to the market and internal employees that the stock price is undervalued. "Under the current downturn in the economic cycle, it is also a safe strategy not to spend money indiscriminately. Instead of investing in other businesses with low returns, it is better to repurchase your own stocks." The analysis point of view points out that either you invest, or Increase investment in research and development, or buy back shares. And when the stock is too low, the cash flow is too high, and the investment yield drops, Tencent's stock repurchase is a better means of capital appreciation than investment. Standing at the current point in time, some fund managers also said that as the world enters a cycle of raising interest rates, Hong Kong stocks may still hover at the bottom for a period of time under the expectation of a global economic recession. However, large technology stocks such as Tencent are at historically low levels, and they already have high investment value and return on investment. In addition, the phenomenon of recent investment capital reduction is relatively obvious, so that listed companies have a very strong incentive to maintain the stock price of listed companies through repurchase, which has a very positive meaning for maintaining the stock price. Taking history as a mirror, it has recently been the largest share repurchase period in Tencent's history, far exceeding the stock price trough in 2018. Can the "bottom" plot be staged again?
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