2013 marks slowdown in buy-backs

Value of repurchases by listed firms doubles from 2012 despite a drop in number of filings

PUBLISHED : Monday, 06 January, 2014, 12:19am
UPDATED : Monday, 06 January, 2014, 1:50am

Buy-back activity in the Hong Kong exchange was relatively quiet last year, with only 88 companies that recorded 1,424 filings. The figures were sharply down from 115 firms and 2,051 filings in 2012 and 161 companies and 2,672 filings in 2011.

The low figures were not surprising as the Hang Seng Index traded at a higher level in 2013 with an average close of 22,605 points, compared with 20,486 points in 2012 and 21,365 points in 2011.

Although the number of firms and filings fell last year, the buy-back value amounted to HK$10.08 billion, nearly double the HK$5.5 billion in 2012 and not far off from the HK$10.68 billion in 2011.

The huge value was due to repurchases by Soho China, Tencent and Golden Eagle Retail, worth a combined HK$4.5 billion. Their trades accounted for 45 per cent of the total value of repurchases last year.

Of the firms that bought back shares last year, 51 recorded an average increase of 27 per cent from their buy-back prices at the end of the year. Meanwhile, 30 companies saw their shares end an average of 18 per cent lower.

Buy-backs by listed firms accounted for an average of 5.6 per cent of the trading volume of their stocks last year. Heavy buy-back volume, however, did not translate into higher share prices as 16 firms with buy-backs that accounted for a minimum of 10 per cent their stocks' yearly volume fell an average of 9 per cent from their purchase prices.

But firms that bought back for several months saw positive results, with the shares of 28 companies that recorded buy-backs for four to 11 months closing 5 per cent up from their buy-back prices.

Mainland developer Soho China was the top buyer by value last year, at HK$1.69 billion. The group was also among the top by number of filings, number of months with trades and volume, making it the most active player.

Soho China recorded 86 buy-back filings over six months from January to July. The deals, totalling 265 million shares, accounted for 13 per cent of the stock's trading volume for the year. The stock closed 4 per cent up from the group's average buy-back price in 2013.

Another top buyer by value was mainland internet play Tencent with 6.64 million shares purchased worth HK$1.63 billion. The stock more than doubled to HK$495 at the end of the year, making it the top performer in 2013.

Another top performer was lottery systems provider REXLot, which repurchased 61 million shares at an average of 53 HK cents each. The company started buying after the stock fell to a low of 49 HK cents in May. The stock closed the year 98 per cent up from the group's average buy-back price.

The most consistent player was toymaker Playmates, buying back 5.5 million shares in 11 months. The deals accounted for 9 per cent of the stock's trading volume for the year. The stock closed 24 per cent up from their average buy-back price in 2013.

Robert Halili is managing director of Asia Insider