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China Evergrande repurchases boost monthly buy-back turnover

Insider buys seen in Fullshare Holdings, Labixiaoxin and Coslight Technology

PUBLISHED : Sunday, 30 April, 2017, 4:51pm
UPDATED : Sunday, 30 April, 2017, 10:23pm

Insider activity was flat for the second straight week based on filings on the Hong Kong stock exchange in the last week of April with 34 companies that recorded 174 purchases worth HK$200 million versus 20 firms with 92 disposals worth HK$224 million. The number of companies and value on the buying side were consistent with the previous week’s four-day totals of 30 firms and HK$185 million. The number of acquisitions, however, was sharply up from the previous week’s 118 purchases. On the selling side, the number of companies and trades were consistent with the previous week’s 15 firms and 79 disposals. The sell value, however, was sharply down from the previous week’s disposals worth HK$370 million.

Aside from directors, buy-back activity was flat last week with 20 companies that posted 89 repurchases worth HK$3.894 billion based on filings from April 21 to 27. The number of firms and trades were not far off from the 22 companies and 85 trades in the previous four-day period. The value, however, was sharply up from the previous week’s turnover of HK$1.9 billion. The repurchases last week pushed the buy-back totals so far in April to HK$10.84 billion with one more trading day that has yet to be reported. That is the largest monthly buy-back total since 1992 and has easily surpassed the previous high of HK$8.2 billion in July 2015. The record turnover last month was mainly due to mainland property developer China Evergrande Real Estate Group with buy-backs worth a whopping US$6.06 billion. Not surprisingly, China Evergrande Group was the top buyer last week with 298 million shares purchased worth US$2.7 billion at an average of US$8.92 each.

Hong Kong’s insider and buyback activity sharply up during last week of March

There were several rare transactions last week with buy-backs in Hin Sang Group and insider buys in Fullshare Holdings, operator Macau Legend Development, Wuyi International Pharmaceutical, Labixiaoxin Snacks Group and Coslight Technology following the sharp fall in their share prices. First-time buys or purchases following a long lay-off indicate stocks are undervalued. On the negative side, there were rare insider sales in IGG and 3SBio following the sharp gain in their share prices. While purchases following gain in share prices may indicate a stock is undervalued, rare disposals following sharp rise in share prices indicate they have reached fair value.

Personal care products developer and distributor Hin Sang Group International Holding bought back for the first time since listing in October 2014 with 1.336 million shares purchased from April 25 to 27 at an average of HK$1.34 each. The trades, which accounted for 20 per cent of the stock’s trading volume, were made on the back of the 55 per cent drop in the share price since July 2016 from HK$2.98. Despite the fall in the share price, the counter is still up since October 2015 from 88 HK cents. The company’s buy-back price was higher than the listing prices of HK$1.20 to HK$1.00. The stock closed at HK$1.37 on Friday.

Insider activity quiet ahead of Lunar New Year, funds take the spotlight

Executive director Shi Zhiqiang recorded his first on-market trades in property developer Fullshare Holdings since January 2015 with 1.26 million shares purchased from April 21 to 25 at an average of HK$2.80 each. The trades increased his holdings by 45 per cent to 4.035 million shares or 0.02 per cent of the issued capital. The purchases were made on the back of the 39 per cent drop in the share price since October 2016 from HK$4.61. Despite the fall in the share price, the counter is still up since February 2015 from 52 HK cents. He previously acquired an initial 2.780 million shares in January 2015 at 53 HK cents each. Shi was appointed to the board in 2014. The stock last traded at HK$2.52 before it was suspended from trading on Wednesday.

Executive director Zheng Yulong recorded his first on-market trades in snack food and jelly products manufacturer and distributor Labixiaoxin Snacks Group since July 2015 with 2 million shares purchased from April 19 to 21 at 47 HK cents each. The trades, which accounted for 89 per cent of the stock’s trading volume, increased his holdings to 730.412 million shares or 54.96 per cent of the issued capital. The purchases were made on the back of the 30 per cent drop in the share price since February from 67 HK cents. The counter is also down since January from 92 HK cents. He previously acquired 2.3 million shares in July 2015 at 66 HK cents each, 3.9 million shares from November to December 2014 at an average of HK$1.06 each and 1.1 million shares in September 2013 at HK$3.79 each. Zheng was appointed to the board in June 2004. The counter closed at 45 HK cents on Friday.

Buybacks take spotlight with several firms recording rare repurchases

Chairman Song Dianquan recorded his first on-market trades in sealed lead acid and lithium ion batteries manufacturer Coslight Technology International Group since November 2007 with 1.2 million shares purchased from April 20 to 21 at an average of HK$3.73 each. The trades increased his holdings to 261.523 million shares or 65.89 per cent of the issued capital. The purchases were made on the back of the 45 per cent drop in the share price since September 2016 from HK$6.75. Despite the fall in the share price, the counter is still up since September 2015 from HK$2.12. He previously acquired 8.8 million shares from March to November 2007 at HK$4.12 to HK$5.19 each or an average of HK$4.58 each. Investors should note that there was a buy-back by the company earlier this year with 2.8 million shares purchased on January 16 at HK$4.90 each. The group previously acquired 4.45 million shares in September 2015 at an average of HK$2.13 each and 58.9 million shares from January 2008 to May 2009 at HK$4.47 to HK$3.30 each or an average of HK$3.69 each. The stock closed at HK$3.98 on Friday.

The record turnover last month was mainly due to mainland property developer China Evergrande Real Estate Group with buy-backs worth a whopping US$6.06 billion

Independent non-executive director Lu Zhao and chairman and chief executive Cai Zongjian recorded their first on-market trades in online game developer and operator IGG since the stock was listed in October 2013 with a combined 3.22 million shares sold from April 24 to 25 at an average of HK$10.50 each. The trades were made on the back of the 92 per cent rise in the share price since March from HK$5.48. The counter is also up since September 2014 from HK$2.71. Lu sold 20,000 shares on April 25 at HK$11.60 each, which reduced her holdings by 8 per cent to 230,000 shares or 0.02 per cent of the issued capital. That sale was made at a profit based on the 20,000 shares that she acquired via exercise of options on April 25 at HK$3.90 each. Cai, on the other hand, sold 3.2 million shares on April 24 at HK$10.49 each, which lowered his stake to 269.665 million shares or 19.94 per cent.

Buyback activity by company directors cools in run up to Easter holiday weekend

Also negative this month is senior vice-president Chi Yuan with 4.65 million shares sold on April 6 at HK$10.54 each, which reduced his holdings to 153.920 million shares or 11.39 per cent. That is also his first on-market trade since listing. Investors should note that there were buy-backs by the company earlier this year with 8.5 million shares purchased from January 4 to 18 at HK$5.17 to HK$5.92 each or an average of HK$5.65 each. The group previously acquired 7.47 million shares from October to December 2016 at an average of HK$5.69 each and 49.1 million shares from December 2015 to August 2016 at an average of HK$3.44 each. The stock closed at HK$11.84 on Friday.

Senior vice-president Su Dongmei recorded her first on-market trades in pharmaceutical products manufacturer 3SBio since September 2016 with 520,000 shares sold from April 20 to 24 at an average of HK$10.21 each. The trades reduced her holdings to 44.926 million shares or 1.77 per cent of the issued capital. The disposals were made on the back of the 42 per cent rebound in the share price since December 2016 from HK$7.20. She previously sold 20,000 shares in September 2016 at HK$8.70 each. That sale was made at a profit based on the 20,000 shares that she acquired in June 2016 at HK$7.53 each. Prior to that purchase, the director sold 958,000 shares in April 2016 at an average of HK$10.63 each. Su was appointed to the Board in June 2012. The stock closed at HK$10.38 on Friday.

Robert Halili is managing director of Asia Insider

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