Industrial stocks lead buy-back activity in 2012
Repurchases pick up steam from second to third quarters with more than 3,000 deals recorded
Buy-back activity was high for the second consecutive year, with 113 companies posting 4,967 repurchases worth HK$5.45 billion in 2012, based on trades up to December 28. The figures, however, were sharply down from the previous year's 161 firms, 6,922 trades and HK$10.68 billion. Despite the sharp fall, the buy-back totals in the past two years are higher than the yearly averages of 81.5 companies, 2,800 trades and HK$5.34 billion from 2009 to 2010.
Breaking down the trading in 2012, buy-back activity was higher from the second to the third quarters, with 3,021 transactions worth HK$3.69 billion. The figures accounted for 61 per cent and 68 per cent, respectively, of the total number of trades and value for the year. Buy-backs in the first and fourth quarters, on the other hand, amounted to 1,946 trades worth HK$1.76 billion.
Industrial stocks led the buying, with 30 firms recording 1,242 transactions worth HK$1.13 billion. This sector led all categories for the number of companies, transactions and value. Four other sectors that recorded heavy buy-backs were technology, financials, retail and property, with a combined 1,724 trades worth HK$3.17 billion. The buy-backs in these five sectors amounted to 71 companies, 2,966 trades and HK$4.3 billion. The totals accounted for 63 per cent, 60 per cent and 79 per cent of the total number of firms, trades and value for the year.
Nine of the 10 firms that bought back the most shares by value this year saw their share prices end the year higher from their average purchase prices. The buying was spread across several sectors, with an average price increase of 28 per cent.
The top buyer by value was financial services provider Allied Properties (HK) with nearly 562 million shares worth HK$591 million bought from January to June at an average of HK$1.05 each. The stock closed 39 per cent higher from the group's average buy-back price at HK$1.46 on Friday.
The second top buyer was property developer Soho China, with 95.6 million shares worth HK$506 million bought from August to December at an average of HK$5.29 each. The group recorded 86 transactions during the period at prices ranging from HK$4.72 to HK$6.12 each. The stock closed up 16 per cent from the company's average buy-back price at HK$6.11 on Friday.
Another company that bought back heavily this year was personal computer and IT products manufacturer Lenovo, with 57.2 million shares worth HK$342 million bought from June to July at an average of HK$5.98 each. The resurgence in the firm's global computer business propelled the stock to close 20 per cent higher from its purchase price at HK$7.18 on Friday.
Most firms that bought back shares in 2012 saw their share prices end higher from their average purchase prices. A total of 80 companies, or 71 per cent of the firms that repurchased shares this year, recorded gains from their purchase prices, with an average rise of 28 per cent. Meanwhile, 33 firms, or 29 per cent, saw their shares end lower from their average purchase prices, with an average fall of 20 per cent.
The top performer was fertiliser producer and magnesium alloy firm Century Sunshine Group, with 34.5 million shares bought from July to September at an average of 23 HK cents each. The buy-backs were well-timed as the stock closed 138 per cent higher from the group's buy-back price at 55 HK cents on Friday.
Another top performer was online game developer and mobile internet firm NetDragon Websoft, with 9.6 million shares bought in June at an average of HK$5.81 each. The stock gained 91 per cent from the group's average buy-back price to HK$11.10 on Friday.
Robert Halili is managing director of Asia Insider