Share Repurchasing Spike in China

Written By Brianna Panzica

Posted July 19, 2011

Energy companies have been implementing share buyback programs more and more as their stock is undervalued.

These share repurchase programs are meant to increase the share value.

When a company believes their stock is undervalued, they will repurchase shares of their own stock from the market, decreasing the number of shares available.

This will in turn increase the value of the remaining shares.

And in the energy market recently, especially for Chinese companies, increasing share value is paramount.

Kandi Technologies Corp (NASDAQ: KNDI), a Chinese vehicle company specializing in off-road vehicle production and electric vehicle development, announced their upcoming buyback plan on Tuesday.

Kandi’s Board of Directors authorized a program in which the company will repurchase $5 million worth of shares.

The purchases will be made with cash over the next 18 months.

On March 25, according to Yahoo! Finance, Kandi Technologies had 27,433,934 shares of voting common stock outstanding.

The shares, CEO Xiaoming Hu believes, are undervalued, and the buyback will benefit investors.

This afternoon, following the announcement, shares of Kandi Technologies were up 26%.

This follows similar decisions made by other companies.

On June 23, SinoTech Energy Limited (NASDAQ: CTE) announced a buyback plan worth $20 million.

SinoTech provides oil recovery services and is based in Beijing, China.

The company believed their American Depository Shares (ADSs) were undervalued, and is now buying back shares with their working capital.

At the end of the first quarter, they had $81 million in cash available, some of which would support the repurchase program.

In addition, the company’s CEO Guoqiang Xin announced intentions to increase the number of operating lateral hydraulic drilling (LHD) units to 20 units by the end of 2011.

Shares were up 8% on the day this was announced.

I also told you about a Chinese solar wafer production company that announced a buyback worth $110 million at the end of June.

This company, LDK Solar (NYSE: LDK), saw a 5.7% gain in share value following the announcement.

That’s all for now,


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