Share Buybacks and Increased Holdings Struggle to Resolve "Below Book Value" Dilemma, Valin Steel: Will Continue to Advance Market Value Management

Staff Reporter Dong Hongyan Beijing Report

In recent years, the highly competitive “involution” in the steel industry has become a key area for increasing holdings and buybacks to boost confidence. On March 11, Hunan Hualing Steel Co., Ltd. (hereafter “Hualing Steel,” 000932.SZ) announced that its insurance fund shareholders completed a six-month share increase, accumulating 132 million shares, raising their stake to 7.97%. Combined with the previous increase by the controlling shareholder and the completed share buyback and cancellation, Hualing Steel has implemented multiple market value management measures.

Under these measures, Hualing Steel’s stock price has significantly recovered since 2025, but the “breaking net” status has not been reversed. A staff member from Hualing Steel’s Secretary Office told Huaxia Times that the company will continue to promote market value management, including the possibility of further increases and buybacks. Industry experts interviewed noted that signals of increased holdings and buybacks are more about confidence stabilization than actual effects, providing short-term reassurance but unlikely to resolve fundamental issues like supply-demand imbalance and profit pressure.

How effective are increased holdings and buybacks?

On March 11, Hualing Steel announced that Shentai Life Insurance Co., Ltd. (hereafter “Shentai Life”), holding more than 5%, had completed its share increase plan. From September 12, 2025, to March 11, 2026, Shentai Life increased its holdings by 132 million shares through centralized bidding on the Shenzhen Stock Exchange, representing a 1.91% increase, raising its stake from 6.06% to 7.97%.

Hualing Steel stated in the announcement that this increase was based on confidence in the company’s future prospects and recognition of its medium- to long-term investment value.

This is not Shentai Life’s first increase in Hualing Steel shares. On July 10, 2025, Shentai Life previously increased its holdings by 413,200 shares through centralized bidding, reaching a 5.000001% stake, becoming an important strategic shareholder.

Besides Shentai Life, the controlling shareholder Hunan Iron & Steel Group and its concerted actors have also made multiple increases. From July to September 2024, Hunan Iron & Steel Group and its concerted actor Xiang Steel Group increased their holdings by a total of 138 million shares through centralized bidding, reaching the 2% limit.

Hualing Steel has also implemented a share repurchase plan. On March 5, it announced that since the first announcement of the buyback plan last year, by February 13, 2026, the company had repurchased 56,023,339 shares through dedicated securities accounts via centralized bidding, accounting for 0.8109% of its current total share capital. The highest transaction price was 5.61 yuan per share, the lowest was 4.41 yuan, with a total transaction amount of approximately 278.6 million yuan. The company completed the cancellation of the repurchased shares on March 4.

Looking back to 2025, Hualing Steel’s stock price received some uplift. On December 31, 2025, the closing price was 5.62 yuan per share, up 34.45% from 4.18 yuan at the end of 2024. As of 2:27 PM on March 12, 2026, the stock was trading at 6.3 yuan per share, a 12.28% increase year-to-date.

A staff member from Hualing Steel’s Secretary Office told Huaxia Times that in recent years, shareholders and the company have taken a series of market value management actions, and last year’s stock price outperformed the market.

However, the long-term “breaking net” situation for Hualing Steel has not been fundamentally alleviated. As of 14:32 on March 12, its price-to-book ratio remained at 0.79 (with a net asset per share of 8.03 yuan in the mid-year and third-quarter reports).

The staff member said that Hualing Steel will continue to adhere to market value management and does not rule out further increases and buybacks, which will be disclosed via announcements in accordance with regulatory requirements.

Industry shows strong differentiation

Hualing Steel mainly produces and sells steel products. In recent years, it has maintained a revenue scale of hundreds of billions yuan, with relatively high profitability in the industry. However, after reaching a peak in 2021 with revenue of 1,715.75 billion yuan and net profit attributable to the parent of 9.68 billion yuan, its revenue has continued to decline. In 2024, revenue fell to 1,446.85 billion yuan, with net profit of only 2.032 billion yuan.

Recent earnings forecasts suggest that Hualing Steel’s 2025 revenue will be around 1,270 to 1,300 billion yuan, continuing to decline year-over-year, but profits are expected to recover to between 2.6 billion and 3 billion yuan.

Compared to this, Hualing Steel’s situation is not the most severe. Many listed steel companies have faced ongoing losses, with stock prices near 1 yuan and increased delisting risks, prompting obvious market stabilization efforts. The share increases and buybacks by Hualing Steel are not isolated; from 2025 to 2026, several other listed steel companies have also seen major shareholders increase holdings, mainly controlling shareholders, insurance funds, and management.

In June 2024, Chongqing Steel announced that its actual controller, China Baowu Steel Group Corporation Limited, through its wholly owned subsidiary Huabao Investment Co., Ltd., planned to increase its holdings of the company’s A-shares using self-owned funds via centralized bidding, with a maximum amount of 300 million yuan and a maximum price of 2 yuan per share.

In 2025, multiple companies including Shandong Iron & Steel, Xingan Steel, Lingang Steel, Fonda Steel, and Chongqing Steel announced shareholder increase plans. Most of these are still ongoing and have not been fully completed. Industry insiders noted that these share increase plans have helped boost market confidence and share prices to some extent.

Industry experts have higher expectations for market value management. Wang Guoqing, director of the Lange Steel Research Center, told Huaxia Times that the signals from buybacks and increases in the steel industry are more about short-term confidence stabilization than fundamental change. While they can stabilize market sentiment and protect valuations temporarily, they are unlikely to alter the industry’s basic fundamentals. Overall, these measures are more about stabilizing at the bottom than reversing losses—they are a band-aid rather than a cure. They can positively impact capital structure and earnings, but under supply-demand imbalance and profit pressures, their long-term effect on stock prices is limited.

However, this “market stabilization” trend may continue. Wang Guoqing pointed out that the steel industry’s buybacks and increases will not fade entirely but will become more differentiated, with clear structural characteristics. Valuation lows, policy encouragement, and state-owned enterprise performance assessments will lead leading and high-quality state-owned enterprises to remain the main players in buybacks and increases. Cash-flow-healthy companies will operate regularly, while weaker, cash-strapped firms will find it difficult to sustain such actions.

Currently, the entire steel industry remains in a deep adjustment phase characterized by weak supply and demand, with a focus on reducing volume and improving quality. The “anti-involution” effort continues. A staff member from Hualing Steel’s Secretary Office said that the future trend of the industry depends on the implementation of policies related to “anti-involution,” and both industry recovery and cleanup will take time.

Wang Guoqing believes that by 2026, the steel industry will show a pattern of stable total volume, profit recovery, and stronger leading companies. The industry will shift from scale expansion to quality improvement, with differentiation and breakthroughs. While a sharp rebound is unlikely, structural optimization and profit margin improvement will be the main themes. Controlled supply, demand upgrades, cost reduction, and efficiency improvements, combined with policy guidance, are pushing the industry from growth driven by scale to development focused on quality and efficiency. 2026 will be a year of recovery, transformation, and differentiation for the steel industry, with more opportunities for top-tier leaders than risks.

Editor: Zhang Bei Chief Editor: Zhang Yuning