HONG KONG STOCKS
The Insider
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Cheung Kong Property’s HK$1.1 billion deals put buy-back activity in limelight in Hong Kong

Repurchases by SEA Holdings, Fairwood and China Gas fuel hopes for rally

PUBLISHED : Sunday, 11 December, 2016, 6:41pm
UPDATED : Monday, 16 January, 2017, 10:28am

Buying among directors surged after two weeks of flat trading while selling fell, based on filings on the Hong Kong stock exchange from December 5 to 9. A total of 41 companies recorded 268 purchases worth HK$443 million, compared with 13 firms with 49 disposals worth HK$56 million.

The buy figures were sharply up from the previous week’s 31 companies, 178 purchases and HK$278 million while the sales side saw a drop from 19 firms, 73 disposals and HK$80 million.

Buy-back activity also surged last week with 25 companies that posted 116 repurchases worth HK$2.32 billion. The number of firms and value were up from 22 companies and HK$1.32 billion while the number of trades was not far off from 126 repurchases previously.

Buy-backs took the spotlight last week, led by Cheung Kong Property Holdings with deals worth HK$1.1 billion, pushing the repurchase total for the week to more than HK$2.3 billion.

SEA Holdings, Fairwood Holdings and China Gas Holdings recorded repurchases last week as well. Shares in these firms tend to rise whenever they buy back from the market. Repurchases by Tianyun International Holdings also indicate some upside in the near term after the group bought back shares last week at below the purchase prices by the company and chairman and chief executive Yang Ziyuan earlier this year.

Property developer and investor CK Property resumed buying back at higher than its previous acquisition prices with 21.5 million shares purchased from December 5 to 8 at an average of HK$51.38 each. The trades were made on the back of the 12 per cent drop in the share price since November from HK$58.45. Despite the fall in the share price, the counter is still up since June from HK$46.

Li Ka-shing’s CK Property wins Sha Tin residential site with bid one third higher than market expectation

The group previously acquired 646,000 shares on May 23 at HK$45.24 each and 13.5 million shares from March 18 to 21 at an average of HK$46.73 each. The repurchases since March are the company’s first buy-backs since listing by way of introduction in June 2015.

The stock closed at HK$52.95 on Friday.

Property management firm SEA Holdings resumed buying back at higher than its acquisition prices from July to October with 208,000 shares purchased on December 6 at HK$19.88 each. The group previously acquired 800,000 shares on October 14 at HK$19.16 each and 2.64 million shares from July 13 to 22 at an average of HK$18.88 each. It also bought 5.1 million shares from January 11 to April 28 at an average of HK$18.96 each.

Investors should note that the stock rose an average of 28 per cent three months after the group bought shares, based on 106 filings since 2009. It recorded a price gain three months after on 92 per cent of those filings.

The stock closed at HK$19.62 on Friday.

Fast-food restaurant chain Fairwood resumed buying back at higher than its previous acquisition prices with 28,000 shares purchased on December 7 at HK$30.46 each. The trade was made after the stock fell 17 per cent from HK$36.85 on November 28. Despite the drop in the share price, the counter is still up since February from HK$24.

The group previously acquired 251,000 shares from January 5 to February 15 at an average of HK$22.99 each. Last year, it also acquired 51,000 shares on December 16 at HK$23.93 each and 393,000 shares from July 6 to September 7 at an average of HK$21.82 each.

Investors should note that the stock rose an average of 5 per cent three months after the group bought shares, based on 124 filings since 2004. It recorded a price gain three months after on 73 per cent of those filings.

The sentiment is not entirely positive this year, with chief executive Chan Chee-shing selling 48,000 shares from February 23 to March 2 at an average of HK$23.54 each to cut his stake to 1.18 per cent.

The stock closed at HK$31.30 on Friday.

Natural-gas pipeline infrastructure investor and operator China Gas picked up where it left off in February with 17.25 million shares bought from November 30 to December 8 at an average of HK$10.20 each. The group recorded purchases every day during the period. The trades were made on the back of the 23 per cent drop in the share price since August from HK$13.30. The buy-backs were also made after the company announced a 29.7 per cent gain in first-half profit to HK$1.69 billion.

China Gas cuts sales target on acquisition delay

The group previously acquired 47.56 million shares from January to February at an average of HK$9.74 each and 63.1 million shares from December 2014 to December 2015 at an average of HK$11.33 each. The repurchases since December 2014 are the company’s first buy-backs since listing in 1995.

Investors should note that the stock rose an average of 10 per cent three months after the group bought shares, based on 33 filings since 2014. It recorded a price gain three months after on 97 per cent of those filings.

Non-executive chairman Cynthia Wong Sin-yue earlier sold 100,000 shares from September 23 to 26 at an average of HK$12.67 each, which lowered her stake to 0.08 per cent.

The stock closed at HK$10.26 on Friday.

Processed-food producer and distributor Tianyun resumed buying back at lower than its acquisition prices from August to October with 602,000 shares purchased from November 30 to December 8 at an average of 76 HK cents each. The buy-back prices were also lower than the listing prices of HK$1.28 to HK$1.68. The trades were made on the back of the 11 per cent drop in the share price since October from 85 HK cents.

The group previously acquired 6.94 million shares from August 30 to October 7 at an average of 85.6 HK cents each and 750,000 shares on July 19 at 75 HK cents each. The repurchases since July are the company’s first buy-backs since listing in July 2015.

Investors should note that Yang bought 878,000 shares from August 25 to 30 at an average of 86 HK cents each, which increased his holdings to 44.71 per cent of the issued capital. He previously acquired 1.87 million shares from June 13 to July 6 at an average of 77 HK cents each and 2.24 million shares from March 31 to May 27 at an average of 94 HK cents each. Last year, he acquired 5.3 million shares from November to December at an average of 93 HK cents each.

Yang’s purchases since November last year are his first trades since listing. Those by the group and Yang this year indicate the stock is undervalued at a consensus level of 87 HK cents.

The counter closed at 76 HK cents on Friday.

Robert Halili is managing director of Asia Insider

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