The largest share repurchase since listing Wenshi shares are stable...

On the evening of December 4, the head pig enterprise Wenshi issued an announcement that it would buy back its own company's shares
with no less than 900 million yuan and no more than 1.
8 billion yuan.
In the A-share market, the stock price of Wens' shares rose
"in response".
At present, tight funds and falling pig prices are the two "big stones"
that weigh on pig enterprises.
As of the end of October this year, Wen's debt ratio was still 58%.

Does its large-scale stock buyback mean that pig companies have come out of the "downturn"?

What it means to buy back shares in large quantities

According to the announcement of Wen's shares, the repurchase price does not exceed 27.
32 yuan per share, and the implementation period of the repurchase is 12 months
from the date of approval of the repurchase plan.

Financial instrument data shows that since its listing, Wens has carried out six share repurchases, ranging from 347,600 shares to 21,678,800 shares, involving amounts between
3,179,800 and 187 million yuan.
In terms of amount, Wen's shares can be described as the largest amount of shares
repurchased since listing.

A researcher from a leading domestic securities institution explained to the China Business Daily reporter that the overall pig market is sluggish, the market valuation of listed pig enterprises has fallen significantly, the valuation of many companies has shown a historical low, and the negative sentiment of investors is heavier
.
At this time, the company carried out share repurchase, on the one hand, sent a signal of strong optimism and expectations, which was conducive to stabilizing the stock price; On the other hand, it helps to maintain control over the company and also lays the foundation
for equity incentives.

"Investing heavily to declare confidence and stabilize stock prices may also indicate that the sales and performance of pig companies have fallen to historical lows, and companies have to stabilize the situation
.
" The researcher further explained, "The market situation of the pig breeding industry is still unclear, and it remains to be seen
whether the follow-up implementation of the corporate repurchase plan and whether the stock price can stop falling and stabilize.
" ”

The reporter called Wen shares as an investor, and the staff said that the repurchase of shares was used for equity incentives and subsequent employee stock ownership plans
.
If this part of the repurchase shares is not used in the future, the company can also adjust
the repurchase plan.

It is worth noting that according to the financial report, as of the end of the third quarter, Wen's book currency funds were only 2.
23 billion yuan
.
Will a large investment in the repurchase of shares "tighten" the company's book funds? Wenshi staff said that the funds for the repurchase of shares were all their own funds and did not involve financing funds
.
In the future, the pig market is expected to improve, and the company's capital situation will further improve
.

Is it "stabilizing the heart" or "gambling"

In the announcement of the repurchase of shares, Wen said that the repurchase reflects the management's firm confidence in the company's intrinsic value and future development plan, which is conducive to safeguarding the interests of investors, especially small and medium-sized investors, and enhancing investor confidence
.

In the face of Wen's statement, the capital market seems to be "standing in two teams"
.

Some institutional investors told reporters that the current capital situation of Wenshi shares is still not optimistic, and it is unknown whether the future repurchase plan can be implemented and to what extent
.
At present, hog prices are still falling, and the announcement of share buybacks at this time may be to attract more foreign investment
.

Wens' shares are currently or still "short of money"
.
Up to now, the five projects raised by Wen shares have been delayed, and the commissioning time has been postponed from
one year to one and a half years.
Wens said that except for the Wuzhou chicken farm expansion project, the reason why the rest of the projects adjusted the schedule is because in the first half of 2022, in order to smoothly pass the bottom of the pig cycle and preserve its strength to survive the difficult period before the sharp rebound in pig prices, the company readjusted the construction planning and rhythm, and reduced large-scale capital expenditure
.

The person in charge of pig breeding related business of Wens Co.
, Ltd.
told reporters that the current pig price is still in a period of fluctuation, downstream slaughtering and consumer demand are low, and the financial pressure at the breeding end is still heavy
.

There are also institutional investors who are more optimistic
about Wen's shares.
The relevant staff of a domestic leading securities company said: "At present, the expansion of pig enterprises is still more rational, and it is expected that the head pig enterprises are still expected to maintain an average profit
of 300-400 yuan in 2023.
" With the growth rate of leading industries and steadily declining breeding costs, Wen's Co.
, Ltd.
is expected to become a white horse target with outstanding certainty of performance in this cycle
.
”

2023 may usher in a large amount of spending

"By announcing such a huge share buyback plan at the end of the year, Wen shares may be looking for a 'way out'
for the capital to be spent next year.
" An agricultural researcher who has been observing listed pig enterprises for a long time told reporters frankly, "Financing difficulty is a problem faced by almost all pig enterprises at present, investors who want to invest in the pig breeding track know that it is now the bottom of this track, and everyone is waiting to see which company has the most potential and is worth investing
.
" ”

The "big expense" of the head pig enterprise to spend money or in
2023.
Wens said: "If the market is good in 2023, the company will appropriately liberalize fixed asset investment to meet the needs
of future development planning.
" The company initially plans to invest about 5 billion to 6 billion yuan in fixed assets next year, mainly investing in the construction of breeding communities, the increase of broiler production capacity and slaughtering business
.
In terms of pig breeding farms, no new project investment is required for the time being, mainly to close the original projects under construction
.
At present, the pig industry mainly needs to increase the capital investment
in the production of pigs and sows.
”

In terms of capital expenditure, Wen shares are more confident, and said in the announcement that this repurchase will not harm the interests of the company and all shareholders, especially small and medium-sized shareholders
.
The company has sufficient own funds and ability to pay, and the repurchase with its own funds will not have a material adverse effect
on operations, finances, debt performance ability and future development.

After the big expenditure, can Wen's shares wait for a good market? "From the current sales data in various places, pork consumption decreased around the Spring Festival in January 2023, and local reserve pork began to be put on the market, so the high pork price in November ran smoothly, and there was no big rise or fall, and this trend may continue to the Spring Festival
.
" The above-mentioned agricultural researcher said, "The overall supply of domestic pigs has been increasing, and the demand at the slaughtering end has been sluggish
.
" This situation may continue into 2023, causing hog prices to continue to fall
in 2023.
”