The Insider
by

Five Hong Kong companies that warrant being on an investor’s watch list

Recent filings to the Hong Kong stock exchange point to insider buying at BYD Electronics and other companies, while Cogobuy Group made a significant share buyback

PUBLISHED : Sunday, 06 November, 2016, 4:23pm
UPDATED : Monday, 16 January, 2017, 10:28am

The buying rebounded while the selling among directors was high for the first time in the past five weeks based on filings on the Hong Kong Stock Exchange from October 31 to November 4.

A total of 28 companies recorded 104 purchases worth HK$160 million versus 16 firms with 58 disposals worth HK$186 million. The number of purchases was unchanged but the number of companies and buy value were sharply up from the previous week’s 22 firms and HK$103 million. On the selling side, the number of disposals was down from the previous week’s 68 trades but the number of companies and value were up from the previous week’s 13 firms and HK$124 million.

Meanwhile, the buyback activity rose for the second straight week with 23 companies that posted 146 transactions worth HK$1.533 billion. The number of firms and trades were up from the previous week’s 20 companies and 116 transactions. The value, however, was down from the previous week’s turnover of HK$1.679 billion.

There were some bullish trades last week as several companies and directors resumed buying at higher prices. Cogobuy Group recorded its highest purchase price since it started its buyback programme in December 2014. On the directors’ side, the heads of BYD Electronic, Oi Wah Pawnshop, Yestar International and Zhongyu Gas resumed buying last week at higher prices, an indication that these stocks are still undervalued despite the run-up in their share prices.

E-commerce platform services provider Cogobuy Group bought 5.7 million shares from October 28 to November 3 at HK$12.04 to HK$12.30 each, or an average HK$12.16. The trades accounted for 33 per cent of the share’s trading volume.

The group previously acquired 5.42 million shares from May 6 to 20 at HK$10.50 to HK$10.96 each or an average HK$10.64 and 4.512 million shares from January 21 to February 15 at HK$7.90 to HK$8.30 or an average HK$8.08.

Prior to these buybacks, the company acquired 200,000 shares in July 2015 at HK$4.90 each and 25.645 million shares from December 2014 to February 2015 at HK$3.90 to HK$4.50 each or an average of HK$4.22 each. The repurchases since December 2014 are the company’s first buybacks since listing in July 2014. The stock closed at HK$11.98 on Friday.

BYD Electronicchief executive Wang Nian-qiang resumed buying shares of the mobile phone components and modules manufacturer, even as the share has risen in price since. Wang bought 2.5 million shares purchased from October 31 to November 1 at an average of HK$6.12, boosting his shareholding by 23 per cent to 13.602 million shares, or 0.6 per cent of the issued capital.

Although the trades were made at a higher price than his previous purchases, they were made on the back of a 12 per cent drop in the share price since September 9.

The acquisitions were also made after the company announced on October 30 a 39.4 per cent gain in third quarter profit to 884 million yuan. Wang previously acquired 2.5 million shares from August 28 to September 2 at HK$5.00 to HK$4.25 each or an average of HK$7.43. The purchases also represent the first by Wang since his appointment in April 2015. The stock closed at HK$6.22 on Friday.

Oi Wah Pawnshop Credit Holdings chief executive Edward Chan Kai Ho was also in buying mode, purchasing 3.78 million shares from October 28 to 31 at HK$0.55.

The trades increased his holdings to 1.320 billion shares or 61.76 per cent of the issued capital. The purchases were made following a 22 per cent rise in the share price since August.

The acquisitions were made after the company announced on October 26 a 61.3 per cent gain in first-half profit to HK$73.791 million. Chan previously acquired 1.98 million shares on June 30 at HK$0.45 and 12 million shares from January to February at an average HK$0.41. Prior to his purchases this year, the chairman acquired 15.9 million shares from August to December 2015 at an average HK$0.48, HK$13.4 million worth of shares from January to July 2015 and HK$17.5 million worth of shares from May to December 2014.

The acquisitions by Chan since May 2014 are the first on-market trades by a director of the company since the stock was listed in March 2013. Historical data shows that these purchases are good signal for investors, as the stock rose by an average of 8 per cent within six months of the chief executive’s buying activity.

The counter closed at HK$0.51 on Friday.

Yestar International Holdings chief executive James Hartono snapped up 2.6 million shares from October 28 to November 1 at an average HK$4.13.

The trades increased his holdings in the colour photographic paper and imaging products manufacturer to 298.073 million shares or 13.7 per cent of the issued capital.

The purchases were made on the back of the 13 per cent rise in the share price since the last week of September. Hartono previously acquired 3.3 million shares from June 21 to 24 at an average of HK$3.31 each, 12.2 million shares from March 17 to May 5 at an average of HK$3.21 each and 4.65 million shares from January 7 to 13 at an average of HK$3.01 each.

Prior to his purchases this year, Hartono acquired 9.9 million shares from October to December 2015 at HK$2.87 to HK$3.40 each or an average HK$3.11 each. The purchases since October 2015 are the first corporate shareholder trades in the company since the stock was listed in October 2013. The price paid by Hartono were higher than the IPO price of HK$1.55. The stock closed at HK$3.99 on Friday.

Zhongyu Gas Holdings chairman Wang Wen Liang bought 36,000 in his company on November 1 at HK$2.05.

. The trade increased his holdings to 592.196 million shares or 23.45 per cent of the issued capital. The purchase was made on the back of the 23 per cent rise in the share price since the second half of July.

He previously acquired 300,000 shares from July 4 to 6 at an average of HK$1.80, 500,000 shares on June 8 and 552,000 shares on May 16 at HK$1.70. Prior to his trades this year, the chairman acquired 2.67 million shares from December 14 to 23, 2015 at an average of HK$1.53 and 4 million shares from March 27 to June 29, 2015 at an average of HK$2.19.

Prior to his purchases since 2015, Wang acquired 4.87 million shares from April to May 2014 at an average of HK$2.16 and 640,000 shares from May to June 2013 at an average of HK$2.14.

The purchases by the chairman since May 2013 are the first on-market trades by a director of the coal-bed methane explorer since the company moved its listing from the Growth Enterprise Market to the main board in July 2012. The stock closed at HK$2.05 on Friday.

Robert Halili is managing director of Asia Insider

business-article-page