THE INSIDER
The Insider
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More gold from ‘Lan Kwai Fong2’ makers? Chairman of Mei Ah Entertainment reloads with 340,000 share purchase in film studio

Last week saw insiders accumulating shares in Mei Ah Entertainment, while selling was recorded by insiders at World Houseware and CITIC Telecom International

PUBLISHED : Sunday, 11 September, 2016, 4:17pm
UPDATED : Monday, 16 January, 2017, 10:28am

Buying rose for the second straight week while the selling among directors was high for the third straight week based on filings on the Exchange from September 5 to 9.

The trading was led by directors of mid and small cap stocks as there was only one blue chip company that recorded a purchase last week with that lone insider acquisition coming from banking giant HSBC Holdings worth a paltry HK$100,000. There were no sales by directors of blue chips last week.

Summing up the director activity last week, a total of 34 companies recorded 161 purchases worth HK$87 million versus 16 firms with 90 disposals worth HK$89 million. The number of companies and trades on the buying side were up from the previous week’s 28 firms and 133 purchases. The buy value, however, was down from the previous week’s purchases worth HK$109 million.

On the selling side, the number of companies was slightly down from the previous week’s 19 firms while the number of disposals was sharply up from the previous week’s 71 transactions. The sell value, however, was sharply down from the previous week’s sales worth HK$637 million.

Li’s acquisitions have resulted in positive gains in the share price with the stock recording an average increase of 29 per cent three months following his acquisitions and 54 per cent six months after

Meanwhile, the buyback activity slowed after rising for four straight weeks with 16 companies that posted 88 repurchases worth HK$1.021 billion. The figures, although high, were down from the previous week’s 21 firms, 115 trades and HK$1.176 billion.

The top buyer last week was banking giant HSBC Holdings with buybacks worth HK$841 million. The Group has repurchased a whopping HK$3.48 billion worth of shares via London Stock Exchange since it embarked on a buyback programme on August 4. HSBC has recorded buys on 23 out of the past 26 trading days.

The consistent repurchases have paid off as the stock has risen from the company’s minimum buyback price of HK$52.92 on August 4 to the current price of HK$59.80, an increase of 13 per cent. We have seen just a fraction of what the Group will buy back as HSBC intends to repurchase up to HK$19 billion worth of shares by the end of this year in a bid to reduce its issued share capital.

The sharp gain in share prices this quarter prompted some directors to trade last week. The chairman of Mei Ah Entertainment resumed buying at higher prices while directors of World Houseware Holdings and CITIC Telecom International unloaded shares following the sharp rebound in their share prices.

Film distributor and television operator Mei Ah Entertainment is our insider stock of the week with chairman Li Kuo-hsing picking up 340,000 shares on September 6 at HK$0.67 each. The trade increased his holdings to 2.919 billion shares or 49.29 per cent of the issued capital.

The purchase was made after the stock rebounded by 56 per cent from HK$0.43 on August 26. The chairman previously acquired 16.6 million shares from June 30 to August 23 at HK$0.53 to HK$0.42 each or an average of HK$0.46 each. Aside from his purchases in the past two months, the chairman acquired 13.3 million shares from January 7 to April 26 at HK$0.78 to HK$0.60 each or an average of HK$0.64 each. Prior to his trades this year, the chairman acquired 44.6 million shares from January to October 2015 at HK$0.49 to HK$1.32 each or an average of HK$0.79 each and 347.4 million shares from September 2001 to December 2014 at HK$0.09 to HK$1.41 each or an average of HK$0.21 each. Li has a lengthy trading history with more than 933 purchases recorded in Mei Ah Entertainment since 1995. His acquisitions have resulted in positive gains in the share price with the stock recording an average increase of 29 per cent three months following his acquisitions and 54 per cent six months after. The stock recorded a price gain three months and six months after on 51 per cent of his acquisitions.

I met Li at a launch event by a US global financial information services provider in 2000. The event featured the trading performance of directors in the Hong Kong market and how they ranked among their peers. Li, along with his assistant, looked up his name in one of the event’s computer terminals. To Li’s surprise, his name was among the directors with the highest insider ratings scores, sharing the platform with heavyweights Li Ka-shing and Lee Shau-kee. Li’s trading performance has remained consistent since that event to the benefit of retail investors that have followed his moves in the past 20 years. To end my lengthy ramble, the purchases by the chairman this year suggest that the stock is undervalued at up to HK$0.78 each. The counter closed at HK$0.64 on Friday.

There were bearish signs in household products manufacturer and distributor World Houseware Holdings with executive director Stanley Lee Kwok Sing and Vice Chairman Lee Chun Sing unloading shares at sharply lower than their previous sale prices. These two directors sold a combined 1.8 million shares from August 26 to September 7 at HK$0.61 to HK$0.70 each or an average of HK$0.65 each. The sales, which accounted for 19 per cent of the stock’s trading volume, were made on the back of the 28 per cent rebound in the share price since July from HK$0.51. The counter is also up since January from HK$0.45. Executive director Stanley Lee sold 1.64 million shares from August 26 to September 7 at an average of HK$0.66 each, which reduced his holdings to 281.777 million shares or 37.74 per cent of the issued capital. He previously sold 1 million shares in November 2015 at HK$0.69 each and 1.5 million shares in June 2015 at HK$0.86 to HK$1.17 each or an average of HK$0.93 each. Mr. Lee was appointed to the board in December 2012. Vice chairman Lee Chun-sing, on the other hand, sold 194,000 shares from August 31 to September 1 at an average of HK$0.61 each, which lowered his stake to 311.708 million shares or 41.75 per cent. He previously sold 50,000 shares on June 2015 at HK$1.17 each. Lee joined the Group in 1985. The counter closed at HK$0.70 on Friday.

Also bearish last week was chief financial officer David Chan Tin-wai of telecommunications services provider CITIC Telecom International with 458,000 shares sold from September 5 to 6 at HK$3.01 each. The trades reduced his holdings by 5 per cent to 8.616 million shares or 0.25 per cent of the issued capital. The sales were significant as those are his first market trades since he joined the group in June 2006. The disposals were made on the back of the 27 per cent rebound in the share price since January from HK$2.37. The counter is also up since May 2012 from HK$0.97. Also negative this year are chairman Xin Yue-jiang and independent non-executive directors Zuo Xun-sheng and Liu Li-qing. Chairman Xin Yue-jiang sold 991,000 shares on August 23at HK$2.90, which lowered his stake by 9 per cent to 9.906 million shares or 0.29 per cent. Independent non-executive director Zuo Xun-shengsold 200,000 shares on May 26 at HK$3.06, which reduced his holdings by 50 per cent to 200,000 shares or 0.01 per cent. That reflects his first market trade since his appointment in April 2014. Lastly, independent non-executive director Liu Li-qing sold 200,000 shares on May 4 at HK$3.16, which lowered his stake by 50 per cent to 200,000 shares or 0.01 per cent. He previously sold his entire holding of 400,000 shares in February 2014 at HK$2.58 each. Mr. Liu joined the Group in March 2007. The stock closed at HK$2.97 on Friday.

Robert Halili is managing director of Asia Insider

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