EHang Announces “Share Repurchase Program Worth USD30 Million” 

EHang has announced that its Board of Direc­tors has approved a Share Repur­chase Pro­gram, allow­ing the com­pa­ny to repur­chase up to USD30 mil­lion of its Amer­i­can Deposi­tary Shares (ADSs) or ordi­nary shares over the next 12 months.

The release states, “The com­pa­ny’s pro­posed repur­chas­es may be made from time to time through open mar­ket trans­ac­tions at pre­vail­ing mar­ket prices, in pri­vate­ly nego­ti­at­ed trans­ac­tions, in block trades and/or through oth­er legal­ly per­mis­si­ble means, depend­ing on the mar­ket con­di­tions and in accor­dance with applic­a­ble fed­er­al secu­ri­ties laws, includ­ing Rule 10b5‑1 and Rule 10b-18 of the Secu­ri­ties Exchange Act of 1934, as amend­ed.”

It con­tin­ues, “The tim­ing and amount of any share repur­chas­es under the Pro­gram will be deter­mined by the company’s man­age­ment at its dis­cre­tion based on ongo­ing assess­ments of price, trad­ing vol­ume and gen­er­al mar­ket con­di­tions, along with the company’s work­ing cap­i­tal require­ments, gen­er­al busi­ness con­di­tions and oth­er fac­tors.” Con­clud­ing, “The com­pa­ny expects to fund repur­chas­es made under this pro­gram from its exist­ing cash bal­ance and cash gen­er­at­ed from oper­a­tions.”

Is this a good or bad thing for investors?

Investo­pe­dia explains, “A com­pa­ny may repur­chase its shares to reduce the cost of cap­i­tal, con­sol­i­date own­er­ship, pre­serve stock prices and boost its key finan­cial ratios. Share buy­backs are a way to return cash to share­hold­ers instead of through div­i­dends. Also, com­pa­nies choose buy­backs for con­sol­i­da­tion, equi­ty val­ue increase and to appear finan­cial­ly attrac­tive.”

It con­tin­ues, “Buy­backs are typ­i­cal­ly financed with debt, which can strain cash flow.” Yet, in this case EHang states repur­chas­es are using “exist­ing cash bal­ance and cash gen­er­at­ed from oper­a­tions.”

Huazhi Hu, Founder, Chair­man and CEO of EHang, com­ment­ed, “This Pro­gram under­scores our con­fi­dence in EHang’s long-term growth poten­tial as well as our capa­bil­i­ty in con­tin­u­ous­ly deliv­er­ing val­ue to our share­hold­ers. Look­ing ahead, we remain focused on advanc­ing our lead­er­ship in pro­vid­ing safe, pilot­less, and sus­tain­able eVTOL solu­tions in the Urban Air Mobil­i­ty sec­tor, while main­tain­ing a dis­ci­plined approach to cap­i­tal allo­ca­tion to ensure sus­tain­able growth and prof­itabil­i­ty.”

Over­all, this news should be viewed as a pos­i­tive move for long suf­fer­ing EHang investors. Some may feel the share price is under­val­ued, espe­cial­ly giv­en the recent pos­i­tive news. The com­pa­ny has been assailed sev­er­al times in recent years by scur­rilous ‘short­ers’ demean­ing EHang with neg­a­tive news that have lat­er not been proven.

But whether this repur­chas­ing will now reflect a ris­ing EHang share price going for­ward is anoth­er mat­ter.

For more infor­ma­tion

https://www.ehang.com

(Top image: One Year EH share price — Cred­it: Yahoo Finance)

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