Eliza Wong
Executive Summary
Key takeaways from Jiyou股份’s strategic share repurchase and divestment plan:
– Jiyou股份 (Jiyou Shares) plans to sell up to 10.48 million shares (2% of total equity) acquired through previous buyback programs
– The company’s two 2024 repurchase programs achieved remarkable timing, buying at market bottoms with composite floating profits exceeding ¥220 million ($30.3 million)
– Second repurchase program generated 207% returns, significantly outperforming broader market indices during the same period
– Despite successful market operations, the company faces ongoing operational challenges with continued revenue declines and net losses
– This case represents a sophisticated example of strategic share repurchase and divestment planning within China’s evolving capital markets
Precision Market Timing in Challenging Conditions
On September 18, 2025, Jiyou股份 (Jiyou Shares) announced plans to divest up to 10.48 million shares through centralized bidding, representing approximately 2% of the company’s total equity. This strategic share repurchase and divestment move involves shares acquired during the company’s two 2024 buyback programs, demonstrating sophisticated capital allocation strategies increasingly common among Chinese listed companies seeking to optimize shareholder value.
The announcement comes as Chinese equities continue to navigate complex market conditions, with many companies leveraging repurchase programs as tools for both value creation and market signaling. Jiyou股份’s approach stands out for its exceptional timing and execution, providing valuable insights for international investors monitoring Chinese market opportunities.
Strategic Rationale Behind the Divestment
According to the company announcement, the divestment period will span from October 20, 2025, to April 19, 2026. Company leadership stated that the sell-off aligns with previously established objectives outlined in their Repurchase Prospectus, with proceeds designated for supplementing working capital.
The price difference between the repurchase and divestment prices will be recorded as either an addition to or deduction from the company’s capital reserve, ensuring no impact on current profit statements. This accounting treatment reflects standard practice for such transactions under Chinese securities regulations and demonstrates the non-operational nature of these gains.
Masterful Execution of 2024 Buyback Programs
Jiyou股份’s current divestment strategy draws from two exceptionally well-timed repurchase programs executed during 2024. The company’s strategic share repurchase and divestment approach demonstrates how sophisticated timing can create substantial shareholder value even during challenging market conditions.
First Repurchase Program: Capitalizing on Market Lows
The initial repurchase program, announced on February 6, 2024, spanned from February 6 to April 30, 2024. During this period, the company repurchased 18.60 million shares, representing 3.55% of total equity, with a total transaction value of ¥100.6472 million ($13.9 million) at an average price of ¥5.41 per share.
The timing proved remarkably prescient. The day before the announcement (February 5, 2024) marked the Shanghai Composite Index’s lowest point in nearly six years. The following day saw the Tonghuashun Micro-Cap Index hit its bottom, positioning Jiyou股份’s repurchase at the precise market trough.
Second Repurchase Program: Doubling Down on Opportunity
The company’s second strategic share repurchase and divestment initiative launched on June 7, 2024, with actual repurchases occurring between June 14 and September 5, 2024. This program acquired 13.09 million shares (2.5% of equity) for ¥50.1737 million ($6.9 million) at an average price of ¥3.83 per share.
Once again, the company demonstrated exceptional market timing. The announcement preceded another significant low point for the Tonghuashun Micro-Cap Index, following a substantial decline in micro-cap stocks. This repurchase occurred near the stock’s eight-year low of ¥3.42 on August 8, 2024, during the repurchase period.
Extraordinary Returns from Strategic Positioning
The company’s strategic share repurchase and divestment planning generated exceptional returns for shareholders. Combined, the two programs repurchased 6.04% of outstanding shares, with the second program particularly standing out for its performance.
Remarkable Price Appreciation and Returns
Following completion of the second repurchase, Jiyou股份’s stock entered a period of volatile but generally upward movement. The share price reached a high of ¥13.07 approximately one year after the second repurchase concluded, representing a maximum increase of 282% from the low point.
As of September 20, 2025, with the stock closing at ¥11.75, the first repurchase program showed floating gains of 117%, while the second program achieved remarkable floating gains of 207%. Combined floating profits reached approximately 147%, representing about ¥220 million ($30.3 million) in unrealized gains.
– First repurchase: 117% gain at September 20, 2025 prices
– Second repurchase: 207% gain, demonstrating exceptional timing
– Composite performance: 147% gain across both programs
– Total floating profit: Approximately ¥220 million ($30.3 million)
Operational Challenges Amid Market Success
Despite these successful market operations, Jiyou股份 faces significant operational challenges. The company, which listed in January 2017, primarily engages in production and sales of packaging printing products and anodized aluminum, including cigarette tipping paper, cigarette labels, and social packaging printing products.
Historical Performance Context
The company’s 2024 stock price decline coincided with its first annual loss since listing. The company reported a net loss of ¥-72.4581 million ($10 million) for 2024, breaking an eight-year profitable streak. In this context, the repurchase operations provided crucial market confidence during a challenging operational period.
Despite strong share price performance over the past year, operational pressures persist. First-half 2025 results showed revenue of ¥104 million ($14.3 million), representing a 63.38% year-over-year decrease, with a net loss of ¥-1.3871 million ($191,000).
Addressing Operational Challenges
Management attributed the revenue decline to reduced cigarette packaging printing business revenue and changes in consolidation scope following subsidiary disposals. The company’s strategic share repurchase and divestment activities occur against this backdrop of operational restructuring.
When questioned about future performance improvement measures and whether specialized departments manage repurchase and divestment activities, the company had not responded to inquiries by publication time. This lack of communication raises questions about transparency despite the apparent sophistication of market operations.
Future Implications and Market Precedents
Jiyou股份’s current divestment plan represents only part of their overall strategic share repurchase and divestment strategy. The company holds 31.69 million repurchased shares (6.04% of equity), meaning after the current sell-off,至少 4.04% will remain in the repurchase special securities account.
Regulatory Framework and Future Plans
According to previous company planning, remaining shares will be sold through centralized bidding after 12 months from disclosing repurchase results and share change announcements, with complete divestment within three years of disclosure. This timeline aligns with standard practices under China Securities Regulatory Commission (中国证监会) guidelines.
The case establishes important precedents for how listed companies might navigate market volatility while creating shareholder value through well-timed capital allocation strategies. Other companies may study this strategic share repurchase and divestment approach as a model for similar market conditions.
Strategic Implications for Market Participants
Jiyou股份’s experience offers valuable lessons for investors, corporate executives, and market observers. The company’s ability to execute this strategic share repurchase and divestment program during challenging conditions demonstrates several important market principles.
Lessons in Market Timing and Execution
The success of both repurchase programs highlights the potential value of counter-cyclical investment strategies, particularly when companies possess strong cash positions and conviction in their intrinsic value. The precise timing near market bottoms suggests either exceptional analysis or fortunate circumstances—either way providing substantial returns.
For international investors, this case illustrates the sophistication increasingly present in Chinese corporate finance strategies. While many Western investors focus on operational metrics alone, this example shows how strategic capital allocation can create significant value independent of operational performance.
Balancing Market Operations and Business Fundamentals
The divergence between successful market operations and challenging business performance raises important questions about sustainable value creation. While the repurchase programs generated substantial returns, the underlying business continues facing significant headwinds.
Investors must consider whether such market operations represent sustainable value creation or temporary financial engineering. The strategic share repurchase and divestment activities provide short-term benefits but must eventually be supported by operational improvement for long-term success.
Forward-Looking Market Perspectives
Jiyou股份’s experience reflects broader trends in Chinese capital markets, where companies increasingly employ sophisticated financial strategies alongside traditional business operations. This strategic share repurchase and divestment success story occurs within China’s evolving regulatory environment and developing capital markets ecosystem.
The case demonstrates how listed companies can leverage market mechanisms to create shareholder value during challenging periods. However, it also highlights the importance of transparent communication and ultimately requires operational improvement to sustain long-term value creation.
For market participants, this example underscores the need to monitor both operational performance and strategic financial activities when evaluating Chinese equities. The sophisticated execution of this strategic share repurchase and divestment program suggests Chinese companies are rapidly developing financial capabilities matching their international counterparts.
As markets continue evolving, investors should expect more companies to employ similar strategies during volatile periods. The challenge remains distinguishing between temporary financial engineering and sustainable value creation strategies that will support long-term growth in China’s dynamic equity markets.
