Shares of Zoomlion Heavy Industry Science and Technology Co. soared as much as 13.82% on Thursday following the company's announcement of a proposal to repurchase up to 10% of its Hong Kong-listed shares.
The Chinese agricultural equipment maker plans to buy back up to 1.58 billion of its H-shares traded in Hong Kong, according to a company statement. Zoomlion cited its confidence in the company's future development prospects and a belief that the current share price undervalues its business as reasons for the buyback plan.
Share buybacks are typically viewed positively by investors as they reduce the number of shares outstanding, automatically increasing earnings per share and Return on Equity. Analysts suggest this buyback plan signals Zoomlion's management believes the company's shares are currently undervalued, encouraging investors to buy into the stock amid expectations of stronger future returns.
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