Mining shares back in favour after steep fall in the past year

Sino Prosper chairman surprises market with big purchase on eve of company's suspension

PUBLISHED : Monday, 01 October, 2012, 12:00am
UPDATED : Monday, 01 October, 2012, 4:21am

Directors' purchases of company shares saw a modest rise last week, with 42 companies reporting 176 purchases worth HK$125 million, compared with the previous week's 153 deals valued at HK$104.4 million.

Most purchases were in mining stocks as they received price support following the steep fall in the past year.

Meanwhile, the sale of company shares by directors surged for the second straight week. Thirteen firms reported 56 disposals, worth HK$119.7 million, up from the previous week's 11 companies and 43 disposals valued at HK$60.9 million.

Chairman Leung Ngai-man bought Sino Prosper after the stock surged as much as 120 per cent from his acquisition prices early last month, with 10.085 million shares bought on September 25 at an average of 52 HK cents. The trade increased his holdings to 213.663 million shares, or 27.54 per cent of the issued capital.

Leung bought the shares for as much as 66 HK cents. This was significantly more than the 3.82 million shares he bought from August 31 to September 24 at 30 to 34 HK cents. The timing of the huge purchase on September 25 was surprising as it was made just before the stock was suspended on Friday pending the announcement of a substantial acquisition and connected transaction.

Executive directors, particularly chairmen, are prohibited from trading their company's shares if they have price-sensitive information.

Overall, in the run-up to the suspension, Leung bought 13.9 million shares worth HK$6.49 million at an average of 46.7 HK cents. He also bought 4.9 million shares from July 11 to 18 at an average of 30.6 HK cents each and 940,000 shares from April 17 to 27 at an average of 43.7 HK cents each.

China Polymetallic Mining bought back shares for the first time since the stock was listed in December last year, with 1.7 million acquired from September 24 to 27 at an average of HK$1.24 each.

The trades, which accounted for 42 per cent of the stock's trading volume, were made on the back of a 43 per cent drop in the price from HK$2.18 in February. The buy-back price was sharply lower than the listing price of HK$2.22.

Independent non-executive director Keith Abell bought 454,000 shares on June 12 at HK$1.78 each, which lifted his holdings to 9.644 million shares, or 0.48 per cent.

The stock closed at HK$1.35 on Friday.

Chief executive Cheung Hung-man recorded his first on-market trades in iron ore explorer Pan Asia Mining since his appointment on July 27, with 1.89 million shares bought from September 21 to 24 at 44 HK cents each. The trades raised his holdings to 19.845 million shares, or 2.18 per cent.

The acquisitions were made on the back of a 177 per cent rise in the price from 15.8 HK cents in June. But the counter is still down from HK$4.20 in May 2010. It closed at 45 HK cents on Friday.

Executive director Chang Yim-yang has been buying shares of China Precious Metal at progressively higher prices since the last week of August, with nearly 88 million shares bought from August 27 to September 26 at HK$1.30 to HK$1.47 each.

The trades increased his holdings by 51 per cent to 259.35 million shares, or 7.44 per cent. He last bought 29.89 million shares from September 24 to 26 at an average of HK$1.46 each.

Chang embarked on his buying spree after the stock rebounded by 30 per cent from HK$1.10 in July. Despite that rebound, the counter is still down from HK$1.52 in January. The acquisitions were also made after China Precious Metal announced on August 24 a 38.56 per cent gain in first-half profit to HK$154.13 million.

Robert Halili is managing director of Asia Insider.