Shares of Guoquan Food Shanghai Co Ltd, a leading food and beverage company in China, surged 5.94% on Tuesday after the company announced plans to repurchase up to HK$100 million (around $12.7 million) worth of its Hong Kong-listed shares.

The repurchase program underscores Guoquan's confidence in its long-term business prospects and belief that its shares are currently undervalued. By reducing the number of outstanding shares, the buyback will boost key metrics like earnings per share and increase the ownership stake for remaining shareholders.

Companies often implement share buybacks when they have excess cash and limited investment opportunities, or when management views the stock as being too cheap relative to the company's intrinsic value. The announcement signals Guoquan's commitment to enhancing shareholder value and optimism about its future earnings potential.