Chinese automaker BYD announced Wednesday that it plans to use its own funds to buy back RMB common shares (A shares) through centralized bidding or other means approved by the China Securities Regulatory Commission. All repurchased shares will reportedly be used for employee stock ownership plans. The total amount of funds for this share repurchase scheme will be between 1.8 billion and 1.85 billion yuan ($268.7 million – $276.2 million).
BYD said that on June 1, the company repurchased shares for the first time by means of centralized bidding transactions through repurchases of special securities accounts. The number of A shares repurchased was 1,452,084, accounting for just 0.04988% of the total shares in the company. The highest transaction price was 300 yuan per share, while the lowest transaction price was 293.37 yuan per share. The total transaction amount was 432,967,997.95 yuan, excluding transaction fees.
BYD claimed that to further activate the company’s technological innovation capability, maintain its competitive advantage and promote its long-term sustainable development, it plans to implement share repurchase for employee stock ownership plan and continuously improve incentives and restraint mechanisms for mutual benefits. It aims to effectively combine the interests of shareholders, the company and the core team, and individual employees, enhancing the overall value of the company.
The announcement shows that BYD has enough available funds to pay for this share repurchase. As of December 31, 2021, the total assets of the company were about 295.78 billion yuan, the monetary funds were about 50.46 billion yuan, the net assets attributable to shareholders of listed companies were about 95.07 billion yuan, and the asset-liability ratio of the company was 64.76%. Assuming that the repurchase amount is based on the upper limit of 1.85 billion yuan, the repurchase funds account for about 0.625% of the total assets of the company and 1.946% of the net assets attributable to shareholders of listed company, according to financial data as of December 31, 2021.