The Insider
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Rarely seen share buying activity points to ‘undervaluation’ in these five companies

PUBLISHED : Sunday, 09 April, 2017, 2:56pm
UPDATED : Sunday, 09 April, 2017, 9:33pm

There were several rare insider acquisitions last week, with purchases in Pizu Group, Honma Golf, Petro-King Oilfield Services, Hopewell Holdings and YGM Trading.

Rare acquisitions, especially first-time purchases by directors since listing, are a strong sign that shares are undervalued.

On the negative side, an executive director of Tencent Holdings recorded his highest sale price since he started selling the company’s shares in 2007. This recent disposal, however, is good news for shareholders as the stock tends to rise when directors of Tencent unload shares of the company.

Chief executive Xiong Zeke recorded his first on-market trades in explosives manufacturer and blasting operations services provider Pizu since his appointment in December 2012, buying 2.24 million shares from March 31 to April 5 at 32 HK cents apiece. The trades, which accounted for 73 per cent of the stock’s trading volume, increased his holdings to 2.57 per cent of the issued capital. The purchases were made on the back of the 18 per cent rebound in the share price since March. The counter closed at 32 HK cents on Friday.

Chairman and president Liu Jianguo recorded the first on-market trades by a director in golfing equipment manufacturer Honma Golf since the stock was listed in October 2016, buying 875,000 shares from March 29 to 31 at an average of HK$6.16 apiece. The trades increased his holdings to 69.57 per cent of the issued capital. The purchases were made on the back of the 37 per cent drop in the share price since October. The chairman’s purchase prices were lower than the initial public offering prices of HK$8.46 to HK$10.98. The stock closed at HK$5.99 on Friday.

Chief executive Zeng Weizhong recorded his first on-market trades in oil and gas field services provider Petro-King Oilfield Services since his appointment in December 2016, buying 1.6 million shares from March 27 to 30 at 47 HK cents each. The trades increased his holdings by 8 per cent, or 1.19 per cent of the issued capital. The purchases were made on the back of a 26 per cent drop in the share price since January. The counter closed at 44.5 HK cents on Friday.

Chairman Gordon Wu Ying-sheung recorded his first on-market trades in property developer and infrastructure firm Hopewell Holdings since April 2016, buying 101,000 shares on April 3 at HK$29.25 apiece. The trade increased his holdings to 28.08 per cent of the issued capital. The acquisition was made following a 10 per cent rebound in the share price since January. He previously acquired 1 million shares in April 2016 at HK$24.98 apiece and 600,000 shares in the 12 months to March 2011 at an average HK$22.95 each. The stock closed at HK$29.40 on Friday.

Executive director Peter Chan Wing-fui recorded his first on-market trade in garment manufacturing, wholesale and retailing firm YGM Trading since 2012, buying 41,000 shares on April 3 at HK$7.89 apiece. The trade increased his holdings to 7.41 per cent of the issued capital. The acquisition was made on the back of the 101 per cent rebound in the share price since October 2016.He previously acquired 53,000 shares in February 2012 at an average of HK$19.46 apiece and 2.15 million shares from September 2009 to July 2010 at an average of HK$6.64 each. The stock closed at HK$8.15 on Friday.

Executive director Martin Lau Chi-ping recorded his highest sale price in blue-chip internet business services provider Tencent since he started selling the company’s shares in 2007, disposing of 800,000 shares from April 3 to 5 at an average of HK$225.51 apiece. The trades reduced his holdings to 0.51 per cent of the issued capital. The disposals were made on the back of the 25 per cent rebound in the share price since December. He previously sold 1.3 million shares in August at an average of HK$201.16 apiece, 600,000 shares in July at HK$178.55 each and 1.4 million shares in March, some of which were options-related sales, at an average of HK$158.71 each. Investors should note that the stock has risen by an average of 7 per cent three months after Lau sold shares, based on 205 disposals since 2007. The stock recorded a price fall three months after on 68 per cent of those disposals.The share closed at HK$227.20 on Friday, higher than Lau’s latest reported share sale.

Overall, the buying among directors remained high while the selling fell based on exchange filings in the first week of April. A total of 45 companies recorded 169 purchases worth HK$228 million versus 16 firms with 73 disposals worth HK$371 million. The number of companies and trades on the buying side were slightly up from the previous week’s 40 firms and 162 purchases. The buy value, however, was down from the previous week’s acquisitions worth HK$332 million. On the selling side, the number of companies was consistent with the previous week’s 15 firms but the number of trades and value were down from the previous week’s 88 disposals worth HK$728 million.

Robert Halili is managing director of Asia Insider

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