A-shares buyback market now shows divergence: share reduction and cancellation occurring simultaneously

Share buybacks as a tool for market value management have shown a clear split in China’s A-share market so far this year: on one side, nearly 15 listed companies have sold the previously repurchased shares, using the “repurchase at a low level and sell off at a high level” approach to draw in short-term funds, and some companies’ divestment profit rates have been impressive; on the other side, cancellation-style buyback cases have expanded in tandem, with listed companies proactively reducing share capital and strengthening intrinsic value.

Positive returns on both buybacks and sell-offs within the year

According to incomplete statistics, more than 10 listed companies, including Huafu Fashion, Olyride, and Hopeful Biotech, have in the course of the year completed the selling of repurchased shares or disclosed updates on the progress of selling repurchased shares. Judging from the results of the selling, the sell-offs by the companies mentioned above have all achieved positive returns. In particular, the sell-off average prices of Olyride, Yongyue Technology, and Tongji Technology are generally higher than their buyback average prices.

On March 17, 2026, Olyride (600666.SH) disclosed a cumulative share-sell-off progress announcement showing that, as of March 16, 2026, the company had cumulatively sold 28.408 million shares of previously repurchased stock, at an average sell price of 3.92 yuan per share, with total transaction proceeds exceeding 111 million yuan. In a share buyback implementation results announcement disclosed in September 2024, the company said that, to safeguard company value and shareholders’ interests, it repurchased 35.721 million shares, representing 1.29% of the company’s total share capital. The company’s cumulative buyback spending was 50.0255 million yuan, and the buyback average price was only 1.40 yuan per share.

Compared with the buyback average price, Olyride’s transaction average price in this sell-off rose sharply. Without having sold all repurchased shares, it had already generated over 50 million yuan. Among all listed companies that sold repurchased shares in this round, it ranked near the top. On the performance front, Olyride expects to turn a loss into a profit in 2025, with attributable net profit projected at 120 million to 160 million yuan. After years of losses, it is bidding farewell to the亏損. However, non-recurring attributable net profit is still expected to be -185 million to -145 million yuan, meaning the main business remains in a loss state.

Yongyue Technology (603879.SH) previously cumulatively repurchased 4.8511 million shares between March and May 2024, representing 1.35% of the company’s total share capital, with an average buyback price of about 3.11 yuan per share. On October 31, 2025, the company disclosed a selling plan. By February 28, 2026, Yongyue Technology had reduced its holdings by selling 2.85 million shares through centralized bidding, accounting for about 0.79% of the total share capital, at an average sell price of about 6.66 yuan per share, for total proceeds of about 18.973 million yuan. In terms of performance, Yongyue Technology’s 2025 full-year earnings forecast indicates that it expects attributable net profit to be a loss of 33.5 million to 50 million yuan in 2025, mainly due to the drone business sales not scaling up and changes in raw material prices in the chemical segment.

Tongji Technology (600846.SH) cumulatively repurchased about 4.4155 million shares between August and October 2024, representing about 0.71% of the company’s total share capital, with an average buyback price of 7.01 yuan per share. The company disclosed its selling plan on October 22, 2025. By February 6, 2026, Tongji Technology had sold all 4.4155 million repurchased shares through centralized bidding, representing about 0.71% of the total share capital. The average sell price was 13.60 yuan per share, and total proceeds were about 60.05 million yuan.

Fodi Carbon (600516.SH) repurchased about 196 million shares between September 19, 2024, and November 4, 2024, accounting for 4.88% of total share capital. The buyback price range was 3.96 yuan per share to 5.48 yuan per share, and the company spent about 100 million yuan to repurchase shares to maintain company value and shareholders’ interests. In November 2025, the company announced a plan to reduce holdings of no more than about 75.69 million shares of repurchased stock, representing 1.88% of total share capital. The proceeds would be used to replenish working capital. By February 25, 2026, the company’s repurchase-specific securities account had reduced holdings of about 40.26 million shares (1%), at an average sell price of 5.983 yuan per share, with total proceeds of about 241 million yuan. The sell-off amount ranked among the top in buyback-and-sell companies within the year. After the sell-off, the company’s repurchase-specific securities account still held 209 million shares (5.19%).

Cancellation-style buybacks accelerate and expand

Although sell-offs tied to buybacks can smooth out extreme stock price volatility and protect listed-company value, the actual outcome of “buy low and sell high” operations often triggers market doubts about whether “buybacks for stabilizing the market have been distorted into an arbitrage tool.” In April 2024, the State Council issued the “Several Opinions on Further Strengthening Regulation, Preventing Risks, and Promoting the High-Quality Development of the Capital Market” (the “New Nine Rules”); it raised the importance of the capital market to a new level. The New Nine Rules clearly state that A-share companies should treat market value management as a key focus, with special emphasis on “guiding listed companies to依法注销 (legally cancel) repurchased shares.”

Market analysts told reporters: “Cancellation-style buybacks mean that after a company repurchases shares, it directly cancels them to reduce capital, shrinking total share capital and directly enhancing earnings per share (EPS), net assets, and return on net assets (ROE). This benefits all shareholders and, at the source, eliminates sell-off arbitrage and idle treasury shares, returning to the fundamental purpose of optimizing buyback structure and rewarding shareholders.”

Wind data shows that in 2025, 1,495 A-share companies launched share buybacks, with a cumulative total buyback amount of 142.736 billion yuan. From the perspective of industry distribution, industries including power equipment, electronics, home appliances, and machinery and equipment all had buyback amounts exceeding 10 billion yuan. According to incomplete statistics, more than 40% of buyback plans are intended for full cancellation or partial cancellation, up from 38.33% in 2024. For example, in the buyback amount of 10 billion yuan by Midea Group, 7 billion yuan would be used for cancellation; in Guizhou Moutai’s 6 billion yuan buyback, all of the repurchased shares would be used for cancellation.

Entering 2026, this trend continues. Wind data shows that, as of March 24, 2026, 356 listed companies had repurchased shares, with a total repurchase amount of 18.189 billion yuan.

In response to the trend of accelerating expansion of cancellation-style buybacks, a North China brokerage’s non-banking financial team noted that cancellation-style buybacks align with the core direction of the New Nine Rules encouraging long-term value investment. Compared with traditional market value management buybacks and buybacks for equity incentives, direct cancellation has an “tax-free dividend” effect, meaning investors do not need to bear dividend tax. Moreover, it can directly enhance core financial indicators such as EPS and ROE, with higher transmission efficiency for valuation repair. This is particularly beneficial for industry leaders and state-owned enterprise listed companies with stable cash flows and strong earnings certainty.

In another brokerage research report, it was emphasized that the overall valuation level of A-shares still remains within a reasonable range, and the increase in cancellation-style buybacks is an important sign of improved corporate governance. It can not only optimize the equity structure, avoid the long-term idleness of treasury shares and subsequent selling pressure, but also convey to the market management’s firm confidence in the company’s fundamentals—forming a positive cycle of “repurchase and cancellation—value improvement—confidence boost.” Going forward, as policies continue to guide it, regular cancellation is set to become the standard capital-operation action for top-performing companies.

An East China brokerage’s strategy team analyzed from the perspective of market impact: compliant sell-offs tied to buybacks are mostly driven by companies’ short-term cash-flow needs, and market recognition is limited. By contrast, cancellation-style buybacks represent an irreversible value-enhancing action, which is more likely over the long term to win favor from institutional investors and long-horizon funds. The divergence between the two types of buybacks will further promote a divergence in valuation across the A-share market, forcing listed companies to abandon short-term arbitrage thinking and return to the underlying purpose of long-term value creation.