Public Firms Pursue Dual Value & Quality Growth

Public companies are the cornerstone of the capital market, and their investment value is directly linked to the development of the capital market and the interests of investors. This year, regulatory authorities have consistently reinforced the responsibilities of listed companies, emphasizing the need to "prominently enhance the investment value of public companies."

"In recent years, the China Securities Regulatory Commission and related agencies have introduced a series of policies and measures that underscore the importance of elevating the quality of listed companies and bolstering investor confidence, guiding more long-term institutional investors into the market, thereby improving the stability and value discovery functions of the capital market." According to Cheng Fengchao, a member of the Academic Advisory Committee of the China Listed Companies Association and President of the Zhongguancun Guorui Financial and Industrial Development Research Association, significant changes are taking place in the capital market.

Like a fine wine that struggles in a deep alley, the value of public companies needs to be communicated to the market, striving for understanding and recognition from the market and investors. Ultimately, this aims for a long-term reconciliation of the value and quality of listed companies. To achieve this, a two-way communication bridge must be built between listed companies and the financial market, fostering a fruitful interactive relationship.

On one hand, listed companies proactively transmit information to the market through measures such as information disclosure, enabling investors to understand the operational conditions of the company and forming a clear perception of the company's quality and development, thus accelerating the resolution of investor disparities and forming a consensus.

Advertisement

On the other hand, through investor briefings, research participation, and responses to online inquiries, listed companies engage in investor relations management to collect, identify, and convey market and investor judgments and recognition regarding the company's value and development plans, establishing a healthy interaction channel between investors and company management, thereby facilitating the optimization of company strategy and operations and enhancing overall corporate value.

This year, the amount of stock repurchases and cash dividends by listed companies have both reached historic highs, with an increasing number of companies and shareholders applying for special loans for buybacks and increased holdings.

Data shows that this year, 237 A-share companies have disclosed plans for third-quarter dividends (including those already implemented), with a total dividend amount reaching 63.815 billion yuan, significantly surpassing the levels of previous years' third-quarter dividend distributions. Between 2021 and 2023, the number of A-share companies proposing third-quarter dividends were 25, 30, and 63, respectively. In terms of repurchases, over 2,000 listed companies have already implemented buybacks in 2024, with a cumulative repurchase amount exceeding 150 billion yuan. Some companies are also deploying a combination of buyback and increased holdings strategies to guide their stock prices back to levels that align with intrinsic value.

Market participants believe these statistics reflect a marked enhancement in listed companies' awareness of improving investment value and conducting market capitalization management. Additionally, the expedited implementation of policies regarding repurchase and increased holdings has encouraged relevant parties to utilize these tools effectively, bolstering investor confidence and enhancing the inherent stability of the market, thereby jointly maintaining the healthy and stable development of the capital market.

"In recent years, with the strengthening of regulatory policies, the governance standards of listed companies have notably improved, information disclosure has become more transparent, and investor protection measures have been better established. ESG (Environmental, Social, and Governance) factors are increasingly receiving attention, becoming critical criteria for assessing corporate sustainability." Tian Lihui, Dean of the Financial Development Research Institute at Nankai University, suggests that to further enhance the efficiency and quality of the capital market, we should improve ESG information disclosure, optimize equity and market structures, enhance the effectiveness and norms of boards of directors, and better protect investors through educational means. Meanwhile, the capital market needs to attract long-term institutional investors, reducing short-term speculation, thereby forming a stable and diversified shareholder structure. Listed companies should increase the proportion of independent directors with governance capabilities to ensure the board can independently and effectively supervise management actions.

"Strategy is the guiding star; direction determines success or failure; innovation is the source of development momentum, and transformation is the only path forward; incentives are the endogenous driving force, and mechanisms determine efficiency; mergers and acquisitions act as catalysts for value enhancement, while integration guarantees scale effects." Cheng Fengchao emphasizes that listed companies should further focus on their core business, avoid blind expansion, steadily improve operational efficiency and profitability, and clearly outline actionable medium- to long-term development goals to ensure sustainable growth. Simultaneously, companies should continually increase R&D investments, focusing on digital transformation and green development, optimizing core competitiveness, seizing opportunities for development brought about by technological advancement and policy dividends, and enhancing market competitiveness and value. By implementing equity incentives and employee stock ownership plans, companies can stimulate the enthusiasm and creativity of management and staff, building an incentive mechanism that aligns the long-term interests of management with those of the company, thereby enhancing effective execution and organizational vitality. Moreover, listed companies should capitalize on industry development opportunities by optimizing resource allocation through mergers and acquisitions, creating synergistic effects, extending industry chain layouts, and enhancing corporate core competitiveness and industry influence.

The enhancement of public company value is a long-term strategy for enterprises. How to leverage capital market tools to improve internal processes, enrich corporate assets, reconstruct external elements, align corporate culture and strategy, and realize the vision and mission of the enterprise will remain a topic worth discussing for the long term.