THE INSIDER
The Insider
by

Share buy-backs dominate market in 2015

PUBLISHED : Sunday, 03 January, 2016, 3:13pm
UPDATED : Sunday, 03 January, 2016, 3:13pm

It was a very active year for buybacks in the Hong Kong market with 143 companies that posted 2,211 filings worth HK$23.534 billion in 2015. The figures are up from the previous year’s 124 firms, 1,865 filings and HK$15.293 billion in 2014.

The most significant statistic is the value as the turnover last year is the highest yearly total since 1992, easily surpassing the previous high of HK$17.49 billion during the Global Financial Crisis in 2008.

The huge value last year was mainly due to three firms, namely Evergrande Real Estate Group, Want Want China Holdings and Huishan Dairy, with buybacks worth a combined HK$14.56 billion. The buybacks by these three firms accounted for 62 per cent of the total turnover last year.

Investors should note that the buyback totals last year are higher than the yearly averages of 124 firms, 2,085 filings and HK$9.96 billion from 2008 to 2014 and significantly more than the yearly averages of 90 companies, 1,433 filings and HK$4.79 billion from 1992 to 2014.

Breaking down the buyback activity in 2015, the most active period was the third quarter with 107 companies that posted 893 filings worth HK$12.532 billion. The number of filings and value accounted for 40 per cent and 53 per cent, respectively, of the totals last year.

The most active month in terms of number of companies and value was in July with 65 firms that posted HK$8.2 billion worth of repurchases. In terms of number of filings, the most active month was September with 421 filings.

In terms of performance, gainers and losers were split with 67 companies that saw their stock ending higher than their average buyback prices in 2015 versus 66 firms with price falls. The gainers posted an average price increase of 22 per cent at the end of 2015 while the losers posted an average drop of 18 per cent.

Overall, the average buyback performance of all firms in 2015 was +2 per cent, which is significantly better than the -5 per cent buyback performance of listed firms in the Singapore market in 2015.

The top buyer last year in terms of value is residential property developer Evergrande Real Estate Group with a whopping 1.923 billion shares purchased worth HK$10.3 billion. The value accounted for 44 per cent of the total turnover in 2015.

The Group recorded 37 filings in four separate months from July to December at prices ranging from HK$3.31 to HK$6.81 each or an average of HK$5.35 each. The heavy buybacks paid off as the stock closed 27 per cent up from the Group’s average buyback price to HK$6.82 in 2015.

Another top buyer last year is dairy products manufacturer China Huishan Dairy Holdings with 847.5 million shares purchased worth HK$2.0 billion. The Group recorded 19 filings in four separate months from July to October at HK$2.00 to HK$2.92 each or an average of HK$2.37 each. The stock closed 25 per cent up from the Company’s average buyback price to HK$2.97 in 2015.

The most active buyer last year is textile manufacturer Billion Industrial Holdings with a whopping 172 filings. The Company easily beat out the nine other top firms that recorded 42 to 88 filings.

The Group bought back 30.2 million shares worth HK$115.4 million in 10 separate months from January to December at HK$3.23 to HK$5.18 each or an average of HK$3.82 each. The active price support paid off as the stock closed nearly 18 per cent up from the Company’s average buyback price to HK$4.49 in 2015.

Meanwhile, the Company that recorded the largest price differential between its highest and lowest buyback prices is gaming play Paradise Entertainment Ltd.

The Group bought back 5.26 million shares at HK$2.85 to as low as HK$1.01 each. The Company recorded 30 filings in eight separate months from January to December. The buybacks, however, failed to stimulate the share price as the counter fell from HK$3.00 per share in January to HK$1.26 at the end of 2015.

Another company that bought back at progressively lower prices last year is mainland department store operator Parkson Retail Group with nearly 62 million shares purchased at HK$2.05 to HK$1.01 each or an average of HK$1.31 each. The Group recorded 28 filings in seven separate months from January to December. Despite the wide price support, the stock closed 23 per cent down from the Group’s average buyback price to HK$1.01 in 2015.

The top performer last year is mainland e-commerce platform provider Cogobuy Group with nearly 24 million shares purchased at HK$3.95 to HK$5.00 each or an average of HK$4.24 each. The Group recorded 29 filings in three separate months from January to July. The buybacks were well-timed as the stock closed 144 per cent up from the Group’s average buyback price to HK$10.36 in 2015.