In the landscape of publicly traded companies, the practice of share buybacks has become a subject of increasing interest and debate. Among various methods, the cancelled share buyback stands out as particularly esteemed, not just by the companies themselves but equally by the investors who eagerly anticipate its announcement. Compared to cash dividends, which have been the traditional method of returning value to shareholders, cancelled buybacks offer a range of benefits that many investors find appealing.

Cash dividends are widely recognized as an essential mechanism for publicly listed companies to reward their investors. In recent years, regulatory authorities have increasingly encouraged firms to distribute cash dividends to shareholders, promoting the idea that consistent and reliable cash payments are a sign of a company's financial health. This encouragement has led to companies providing multiple dividends under certain conditions. Yet, for individual investors, the impact of cash dividends often seems considerably limited. The process of ex-dividend treatment creates a situation where shares lose value upon the declaration of a dividend, and additionally, taxes on dividends can diminish the financial benefit that investors receive. Following these steps, the perceived increase in wealth may actually turn negative, particularly emphasized when dividends are substantial. With this understanding, it becomes clear why cancelled share buybacks garner favor among investors.

What makes cancelled buybacks distinct is their ability to similarly generate market enthusiasm, leading to an increase in investor wealth without the drawbacks associated with cash dividends. Unlike dividends, cancelled buybacks do not involve the same ex-dividend complications nor dividend taxes, meaning that investors do not suffer a financial setback when a cancelled buyback is executed. Instead, cancelled buybacks naturally tend to enhance the earnings per share of remaining stocks—a significant factor in assessing a company's investment value—which often results in a favorable response in the stock market. Consequently, this heightened interest frequently contributes to a rise in share prices, further solidifying the appeal of cancelled buybacks.

Nevertheless, despite the undeniable advantages of cancelled share buybacks, they are not universally applicable to all listed companies. Each situation requires a tailored approach to determine if such a strategy is suitable. For instance, newly listed companies that have just met the criteria for listing may find themselves in a precarious position if they pursue cancelled buybacks too early, as doing so could jeopardize their compliance with listing requirements. Thus, it becomes apparent that this technique should not be hastily applied by every firm without consideration of its specific financial landscape and context.

Similarly, older established companies, while not facing the same strict criteria for listing, can still encounter scenarios where cancelled buybacks would not be advisable. A case in point is the announcement made by Kweichow Moutai on September 20, indicating plans to execute a cancelled share buyback using their own funds, which would range from 30 billion to 60 billion yuan. This buyback will utilize company shares in a proportion of 0.133% to 0.266%, marking its first venture into cancelled buybacks since the company was listed 23 years ago. The rationale provided by Kweichow Moutai for this action was to protect both the company and its extensive shareholder base while bolstering investor confidence.

The immediate market response to Kweichow Moutai's cancellation buyback announcement was predominantly positive, likely contributing to a short-term boost in the company's stock prices. However, taking a more extended view reveals that such a course of action could lead to negative consequences. As one of the benchmark companies in the A-share market, and recognized as the "king" of A-shares with a market capitalization exceeding 1 trillion yuan, Kweichow Moutai faces unique challenges.

Despite its substantial market capitalization, Kweichow Moutai operates with a relatively small number of shares outstanding—approximately 1.256 billion shares. This peculiarity creates significant challenges in terms of liquidity, a circumstance that is heightened when conducting cancelled buybacks. It is this limitation that raises concerns regarding the viability of such a move by Kweichow Moutai. Investing in a cancelled buyback could inadvertently exacerbate the existing liquidity issues, making it unfeasible. Given this context, Kweichow Moutai must approach canceled buybacks with caution, prioritizing continuous management of market value and investor trust.

Ultimately, Kweichow Moutai's major stakeholder, the Kweichow Moutai Distillery Group, is in a position to bolster market confidence through alternative mechanisms, such as increasing their holdings in the company instead of persisting with cancelled buybacks. If these major stakeholders demonstrate integrity and substantial investment through their expanded shareholding, there exists a realistic opportunity to replace the typical cancelled buyback strategy within the market.

Furthermore, in addressing medium- and long-term strategies, Kweichow Moutai can enhance stock liquidity through thoughtful profit distribution methods. Beyond their established practice of issuing cash dividends, introducing modest stock increases—perhaps 10 shares for every 2 or 3 shares held annually—can enhance stock liquidity and potentially curtail concerns regarding excessive share increases that may lead to stock price depreciation. Ensuring the price stability of Kweichow Moutai's shares is paramount in maintaining its position as a leading figure in the market. Maintaining and cultivating this status will be critical in how Kweichow Moutai navigates the complexities of investor returns and corporate strategy in a competitive environment.