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

Share buybacks as a means of market capitalization management have shown a clear polarization in the A-share buyback market this year: on one side, nearly 15 companies have sold previously repurchased shares, relying on “low buybacks and high reductions” to replenish short-term funds, with some companies achieving impressive reduction yields; on the other side, cases of cancellation buybacks are expanding simultaneously, as listed companies actively reduce their share capital and solidify intrinsic value.

Both buybacks and reductions have achieved positive returns this year

According to incomplete statistics, more than 10 listed companies, including Huafu Fashion, Aorui De, and Hebang Bio, have completed the reduction of repurchased shares or disclosed progress announcements on their reductions this year. From the results of the reductions, the operations of the aforementioned companies have all achieved positive returns, with companies like Aorui De, Yongyue Technology, and Tongji Technology generally seeing their average reduction prices exceed their buyback prices.

On March 17, 2026, Aorui De (600666.SH) disclosed an announcement on cumulative reduction progress, stating that as of March 16, 2026, a total of 28.408 million shares of previously repurchased stock had been reduced, with an average reduction price of 3.92 yuan/share, and a total transaction amount exceeding 111 million yuan. The company’s announcement on the buyback implementation results in September 2024 indicated that to maintain company value and shareholder rights, it repurchased 35.721 million shares, accounting for 1.29% of the company’s total share capital, with a total buyback investment of 50.0255 million yuan and an average buyback price of only 1.40 yuan/share.

Compared to the average buyback price, Aorui De’s transaction average price for this reduction has significantly increased. Before fully reducing all repurchased shares, the company has already gained over 50 million yuan and ranks among the top in this round of reductions of repurchased shares among listed companies. In terms of performance, Aorui De expects to turn a profit in 2025, with a net profit attributable to the parent company expected to be between 120 million and 160 million yuan, ending years of losses, although the net profit attributable to the parent company after deducting non-recurring gains and losses is still expected to be between -185 million and -145 million yuan, indicating that the main business is still in a loss state.

Yongyue Technology (603879.SH) repurchased a total of 4.8511 million shares of the company from March to May 2024, accounting for 1.35% of the company’s total share capital, with an average buyback price of about 3.11 yuan/share. On October 31, 2025, the company disclosed a reduction plan, and as of February 28, 2026, Yongyue Technology had reduced 2.85 million shares through centralized bidding, approximately 0.79% of the company’s total share capital, with an average reduction price of about 6.66 yuan/share, and a total transaction amount of about 18.973 million yuan. In terms of performance, Yongyue Technology’s profit forecast for 2025 indicates an expected net profit loss of 33.5 million to 50 million yuan, mainly affected by the lack of significant sales in the drone business and fluctuations in raw material prices in the chemical sector.

Tongji Technology (600846.SH) repurchased approximately 4.4155 million shares of the company from August to October 2024, about 0.71% of the company’s total share capital, with an average buyback price of 7.01 yuan/share. The company disclosed a reduction plan on October 22, 2025, and as of February 6, 2026, Tongji Technology had reduced all repurchased shares of 4.4155 million shares, about 0.71% of the company’s total share capital, with an average reduction price of 13.60 yuan/share, and a total transaction amount of about 60.05 million yuan.

Fangda Carbon (600516.SH) repurchased approximately 196 million shares from September 19 to November 4, 2024, accounting for 4.88% of the total share capital, with a buyback price range of 3.96 yuan/share to 5.48 yuan/share, costing about 100 million yuan to repurchase shares to maintain company value and shareholder rights. In November 2025, the company announced a plan to reduce no more than approximately 75.69 million shares of repurchased stock, accounting for 1.88% of the total share capital, with the funds used to supplement working capital. As of February 25, 2026, the company’s dedicated securities account for buybacks had reduced approximately 40.26 million shares (accounting for 1%), with an average reduction price of 5.983 yuan/share, and a total transaction amount of about 241 million yuan. The reduction amount ranks among the top within the year for companies reducing repurchased shares, and after the reduction, the company’s dedicated securities account still holds 209 million shares (accounting for 5.19%).

Cancellation buybacks are accelerating expansion

Although buyback reductions can moderate extreme fluctuations in company stock prices and maintain the value of listed companies, the actual operational results of companies “buying low and selling high” often raise market doubts about “buybacks for price protection transforming into arbitrage tools.” In April 2024, the State Council issued the “Opinions on Strengthening Regulation to Prevent Risks and Promote High-Quality Development of the Capital Market” (the new “Nine Provisions”), elevating the importance of the capital market to a new height. The new “Nine Provisions” clearly state that A-share companies should prioritize market capitalization management work, particularly emphasizing “guiding listed companies to buy back shares and legally cancel them afterwards.”

Market analysts told reporters: “Cancellation buybacks refer to companies directly canceling capital reduction after repurchasing shares, reducing total share capital, which directly enhances earnings per share (EPS), net assets, and return on equity (ROE), benefiting all shareholders and fundamentally eliminating the potential for arbitrage from reductions and idle treasury shares, returning to the essence of buybacks optimizing structure and rewarding shareholders.”

Wind data shows that in 2025, 1,495 A-share companies initiated share buybacks, with a total buyback amount reaching 142.736 billion yuan. From an industry distribution perspective, industries such as power equipment, electronics, home appliances, and machinery have all exceeded 10 billion yuan in buyback amounts. According to incomplete statistics, over 40% of buyback plans aim for complete or partial cancellation, an increase from 38.33% in 2024. For instance, in Midea Group’s 10 billion yuan buyback amount, 7 billion yuan will be used for cancellation; Kweichow Moutai’s 6 billion yuan buyback shares will be entirely used for cancellation.

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

In response to the accelerating trend of cancellation buybacks, a non-bank financial team from a North China brokerage pointed out that cancellation buybacks align with the core guidance of the new “Nine Provisions” that encourage long-term value investing. Compared to traditional market capitalization management buybacks and equity incentive buybacks, direct cancellation has a “tax-free dividend” effect, allowing investors to avoid dividend taxes, and can directly enhance core financial indicators like EPS and ROE. This leads to a higher efficiency of valuation repair, especially benefiting industry leaders and state-owned enterprise listed companies with stable cash flow and strong performance certainty.

Another brokerage report emphasized that the overall valuation of A-shares remains within a reasonable range, and the increase in cancellation buybacks is an important sign of the upgrading of listed company governance levels. It can optimize share capital structure, avoid long-term idleness of treasury shares and subsequent reduction pressures, while also conveying management’s strong confidence in the company’s fundamentals to the market, forming a positive cycle of “buyback cancellation—value enhancement—confidence boost.” With continued policy guidance, regular cancellations will become a standard action in capital operations for high-performing companies.

A strategy team from an East China brokerage analyzed the market impact dimension, stating that compliant reduction buybacks are often driven by short-term cash flow needs of companies, with limited market recognition. In contrast, cancellation buybacks are irreversible value-enhancing actions, making them more likely to attract institutional and long-term funds. The differentiation between these two types of buybacks will further drive valuation differentiation in the A-share market, compelling listed companies to abandon short-term arbitrage thinking and return to the essence of long-term value creation.