(Yicai Global) April 13 -- Gree Electric’s stock price surged after China’s biggest air-conditioner maker announced a plan to spend up to CNY6 billion (USD852 million) repurchasing as much as 1.42 percent of its shares.

The shares [SHE:000651] closed 5.2 percent up today at CNY56.51 (USD8.01) each, the highest in a month, after earlier gaining as much as 6 percent.

The buyback is aimed at stabilizing the firm’s stock price, Zhuhai-based Gree said in a statement yesterday. Buybacks are usually aimed at removing some of a firm’s publicly traded shares from the secondary market, thereby buoying or raising the price of the stock.

As the new coronavirus pandemic has bashed the household appliance sector, Gree’s stock fell 11.8 percent last month and is down 20 percent from a record high of CNY70.56 in January. Its sales plummeted to near zero in February, equal to a loss of about CNY20 billion, Chairwoman Dong Mingzhu told broadcaster CCTV in an interview.

Gree plans to spend between CNY3 billion to CNY6 billion buying 0.71 percent to 1.42 percent of its total share capital at up to CNY70 per share. It will use the equity in employee stock ownership plans or other incentives, the statement said.

Archrival Midea Group also embarked on a stock buyback of up to CNY5.2 billion in February. The Foshan-based firm had reacquired CNY700 million (USD99.3 million), or 0.2 percent of its share capital, by the end of March, its latest data show.

Well-known Chinese investment firm Hillhouse Capital bought a 15 percent stake in the electronics maker from the Zhuhai city government last October for almost CNY40 billion to become its largest shareholder. Hebei province-based Jinghai Guarantee Investment, a consortium founded by 10 Gree dealers, is the company's second-largest investor with an 8.91 percent stake.

Editor: Ben Armour