The Insider
by

Directors’ buying rises for fifth straight week while selling rebounds sharply

Car rental firm CAR, wind power group Concord New Energy, gaming firm MGM China, and paper maker Lee & Man highlighted

PUBLISHED : Sunday, 19 March, 2017, 7:32pm
UPDATED : Monday, 20 March, 2017, 1:15am

Directors’ buying rose for the fifth straight week based on filings on the Hong Kong exchange from March 13 to 17, with 15 companies recording 61 purchases worth HK$139 million (US$17.91 milllion).

The figures were up from the previous week’s 12 firms, 50 purchases and HK$122 million.

Selling, on the other hand, rebounded sharply with eight companies recording 59 disposals worth HK$207 million, sharply up from the previous week’s three firms, 17 disposals worth HK$28 million.

Aside from directors, buy-back activity rose with seven companies posting 17 repurchases worth HK$918 million from March 10 to 16. The figures were up from the three firms, 15 trades and HK$836 million in the previous five-day period.

The increase in insider activity and buy-backs in the past five weeks is mainly attributed to release of earnings as directors and companies are prohibited from trading during the one to two months prior to the announcement of results.

Several firms recorded significant buy-backs and insider trades after earnings were announced. Among them were car rental firm CAR Inc and wind power generation firm Concord New Energy Group.

Gaming play MGM China Holdings resumed buying back following the rebound in its share price. On the flip side, paper products manufacturer Lee & Man Paper Manufacturing resumed buying back following the sharp fall in its share price. The buy-backs in these four firms are significant as their shares tend to rise three or six months following their repurchases.

CAR resumed buying back at a lower price with 4.07 million shares purchased on March 15 at HK$7.19 each. The buy-back was made after the company announced on March 14 a 4.15 per cent gain in year-end net profit after tax to 1.46 billion yuan (US$211 million).

The group previously acquired 3.385 million shares from November to December 2016 at an average of HK$7.59 each and 62.68 million shares from June to July 2016 at HK$7.26 to HK$7.98 each or an average of HK$7.59 each.

The repurchases since June 2016 are the company’s first buybacks since listing in September 2014. Its last buyback price was lower than the IPO prices of HK$7.50 to HK$8.50. Investors should note that the stock rose by an average of 6 per cent three months after the group bought shares based on 18 filings since June 2016. The stock recorded a price gain three months after on 89 per cent of those filings. The stock closed at HK$7.37 on Friday.

Wind power generation firm Concord New Energy resumed buying back after it announced its annual results on March 8 with 7.2 million shares purchased from March 9 to 10 at an average of 41.5 HK cents each. It posted a 13.44 per cent gain in year-end profit to 461.62 million yuan. The trades were made on the back of the 8 per cent drop in the share price since February 13 from 45 HK cents.

The group previously acquired 19.37 million shares from December 29 to 30, 2016 at an average of 40 HK cents each, 1.93 million shares from September 30 to October 11, 2016 at an average of 40.7 HK cents each and nearly 140 million shares from January 14 to June 29, 2016 at 30.5 HK cents to 42 HK cents each or an average of 34.3 HK cents each.

Prior to the repurchases since January 2016, the company acquired 73.53 million shares in December 2015 at an average of 45.3 HK cents each, 6.96 million shares in September 2011 at an average of 33 HK cents each and 3.6 million shares from January to June 1998 at an average of 36 HK cents each.

Investors should note that the stock rose by an average of 10 per cent three months after the group bought shares based on 22 filings since 2011. The stock recorded a price gain three months after on 64 per cent of those filings. The counter closed at 41 HK cents on Friday.

Gaming firm MGM China picked up where it left off in December 2016 with 13,000 shares purchased on March 16 at HK$15.24 each. The trade was made on the back of the 12 per cent rebound in the share price since February from HK$13.60.

The group previously bought 466,000 shares in December 2016 at HK$15 each and 20,000 shares in September 2015 at HK$11.80 each. Prior to the buy-backs since 2015, the company acquired 988,000 shares from March to December 2014 at HK$31.55 to HK$20.95 each or an average of HK$25.81 each and 2.7 million shares from March to December 2013 at HK$18.90 to HK$31.80 each or an average of HK$25 each.

Investors should note that the stock rose by an average 12 per cent, six months after the group bought shares based on 10 filings since March 2013. The stock recorded a price gain six months after on 56 per cent of those filings. The stock closed at HK$16.18 on Friday.

Paper products manufacturer Lee & Man Paper Manufacturing picked up where it left off in December 2016 with 4.92 million shares purchased on March 16 at HK$6.25 each. The trade was made on the back of the 19 per cent drop in the share price since February from HK$7.69.

Although the group resumed buying back following the sharp fall in the share price, the buy-back was made at higher than the company’s previous acquisition prices. The group previously acquired nearly 18 million shares in December 2016 at an average of HK$5.89 each, 1.45 million shares from March to May 2016 at an average of HK$4.99 each and 20.95 million shares in January 2016 at an average of HK$4.07 each.

Prior to the repurchases since January 2016, the company acquired 91 million shares from March to December 2015 at HK$3.61 to HK$5.05 each or an average of HK$4.50 each and 86.3 million shares from January 2013 to November 2014 at HK$5.99 to HK$3.89 each or an average of HK$4.85 each. Investors should note that the stock rose by an average of 6 per cent three months after the group bought shares based on 103 filings since 2013. The stock recorded a price gain three months after on 60 per cent of those filings. The stock closed at HK$6.37 on Friday.

Robert Halili is the managing director of Asia Insider

business-article-page