(Yicai Global) Sept. 18 -- New Hope Liuhe intends to repurchase its own shares, a decision the leading Chinese animal feed supplier made in the wake of a steep price correction in the past few weeks. Its shares gained.

The Chengdu-based company, which is also a major hog and poultry breeder, will buy back between CNY400 million and CNY800 million (USD59 million and USD118 million) of its stock, it said in a statement yesterday.

Shares of New Hope [SHE:000876] had risen by about 56 percent during the two and a half months to early September to a record CNY42.2 on Sept. 2, but plunged thereafter to wipe out the gains.

Buybacks remove some of a firm’s outstanding shares from the secondary market, helping to shore up the stock price. New Hope closed 3.3 percent higher today at CNY29.59 (USD4.33). The benchmark Shenzhen Component Index rose 1.8 percent.

The company will use its own funds to buy the shares at a maximum price of CNY40 each over the next year and will use them for employee incentive plans, it said.

New Hope, which is rapidly expanding into downstream pig breeding, also announced yesterday three piggery investment schemes and five purchase plans for asset projects related to hog breeding.

It will invest CNY1.83 billion (USD267.91 Million) in Shijiazhuang and Tianjin in North China and in its Sichuan province home to build three breeding bases with combined annual output of 1.5 million heads that will drive 423,000 tons of new feed demand.

The company will also spend CNY122 million to acquire all equity in five industrial chain-related projects in Tianjin that include 6,000 breeding pigs, supporting fattening operations and organic fertilizer production.

Formed in 1998, New Hope’s main business includes feed, broilers and other poultry, and pig breeding and food processing. It sold 384,900 breeding pigs, piglets and 3,165,500 fattened hogs last year. For breeding, it ranks fourth among listed Chinese hog companies. New Hope aims to slaughter 8 million head this year.

Editor: Ben Armour