(Yicai Global) Feb. 24 -- Shares in Midea Group surged as much as 7.5 percent today after the Chinese home appliance giant announced that it will spend around CNY14 billion (USD2.2 billion) in the mainland’s biggest ever share repurchase plan.

Midea’s stock price [SHE:000333] closed up 4.49 percent at CNY95.02 (USD14.74) today, giving it a market capitalization of CNY636.6 billion (USD99 billion). Earlier in the day it had reached CNY97.80. Just two weeks earlier the firm’s stock hit an all-time high of CNY108 each.

Midea will buy back between 50 million and 100 million shares on the secondary market at no more than CNY140 (USD21.71) apiece over the next 12 months, the company said yesterday. A stock buyback demonstrates the firm’s confidence in its future prospects while creating value for shareholders, it added.

The money will come from the company's own funds, Midea said. The Shunde, Guangdong province-based firm had about CNY66.5 billion (USD10.3 billion) in cash as of Sept. 30 last year and total assets of CNY350.4 billion (USD54.3 billion).

Despite the Covid-19 pandemic, Midea managed to post a 3.3 percent gain in profit in the first three quarters last year from the year before to CNY22 billion (USD3.4 billion) despite a 1.81 percent dip in income to CNY217.8 billion (USD33.8 billion).

Investment banker China International Capital Corp has kept its rating of ‘outperform’ for Midea stocks with a target price of CNY123 each if the white goods maker is able to pass on the rising costs of raw materials and remain competitive.

The previous biggest buyback scheme was by insurance giant Ping An Insurance which cost CNY6 billion and ended last April.

Editor: Kim Taylor