THE INSIDER
The Insider
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Hong Kong company stock buying high for third week amid heavy trade in blue chips

PUBLISHED : Sunday, 20 November, 2016, 5:19pm
UPDATED : Monday, 16 January, 2017, 10:28am

The buying was high for the third straight week while the selling among directors rebounded based on filings on the Hong Kong stock exchange from November 14 to 18. A total of 34 companies recorded 196 purchases worth HK$356 million versus 13 firms with 38 disposals worth HK$52 million. The number of companies on the buying side was not far off from the previous week’s 38 firms while the number of trades was up from the previous week’s 168 acquisitions. The buy value, however, was sharply down from the previous week’s purchases worth HK$602 million.

On the selling side, the number of firms and trades were up from the previous week’s 11 companies and 34 disposals but the sell value was down from HK$101 million.

Meanwhile, the buy-back activity was high for the third consecutive week with 25 companies that posted 129 repurchases worth HK$1.76 billion. The figures were not far off from the previous week’s 22 firms, 127 trades and HK$2.01 billion.

There was heavy buying in the blue chips for the second week with initial buybacks in CK Hutchison Holdings and more insider buys in Sun Hung Kai Properties and Henderson Land Development. The trades in SHKP and Henderson Land are worth noting as tycoon Lee Shau-kee bought shares in those two blue chip property plays last week. Meanwhile, three stocks that have performed well following repurchases in the past recorded acquisitions last week with buybacks in Cogobuy Group, Techtronic Industries and Playmates Holdings. Lastly, there are strong signs that the shares of Haitian International Holdings are undervalued as two directors bought shares after the stock fell below their sale prices earlier this year.

The most significant trade in the Hong Kong market last week was in blue chip conglomerate CK Hutchison as the group bought back for the first time based on filings on the exchange since 1992. CK Hutchison picked up two million shares from November 17 to 18 at HK$92.50 to HK$95 each or an average of HK$94.08 each.

The trades, which accounted for 15 per cent of the stock’s trading volume, were made on the back of the 9 per cent drop in the share price since the first week of September from HK$103.20. Despite the fall in the share price, the counter is still up since July from HK$81.90.

Aside from the company, co-managing director Canning Fok Kin-ning recorded his first acquisition this year with one million shares purchased on August 12 at HK$95.37 each. The trade increased his holdings by 24 per cent to 5.111 million shares or 0.13 per cent of the issued capital. Another CKH director that has bought shares this year non-executive director George Magnus with 2,000 shares on April 7 at HK$99.15 each. The trade boosted his stake to 936,000 shares or 0.02 per cent. He previously acquired 234,000 shares from March 1998 to September 2001 at HK$36 to HK$70 each or an average of HK$45.85 each. The shares of CKH closed at HK$94.90 on Friday.

Lee has been active this month with purchases in his flagship Henderson Land Development and in SHKP where he holds a non-executive position. He, along with chairman and managing director Raymond Kwok Ping-luen and deputy managing director Mike Wong Chik-wing, acquired a combined 3.25 million shares of SHKP from November 7 to 16 at HK$104.79 to HK$99.65 each or an average of HK$102.98 each. The trades were made after the stock fell by as much as 18 per cent from HK$120.90 in September.

Lee recorded his first trades since July last year with 1.31 million shares purchased from November 9 to 14 at an average of HK$102.56 each. The trades boosted his stake to 60.45 million shares or 2.09 per cent.

Meanwhile, Kwok purchased 1.84 million shares from November 7 to 16 at an average of HK$103.18 each, which increased his holdings to 512.37 million shares or 17.7 per cent of the issued capital. He previously acquired 2.34 million shares from June 13 to 73 at an average of HK$89.02 each and 6.04 million shares from January 4 to 26 at HK$91.95 to HK$80.60 each or an average of HK$86.60 each.

Lastly, Wong purchased 100,000 shares on November 8 at HK$104.79 each, which increased his holdings by 31 per cent to 418,000 shares or 0.01 per cent. He previously sold 30,000 shares in December 2003 at HK$64.75 each. The shares of SHKP closed at HK$100.30 on Friday.

Lee also acquired more shares of Henderson Land Development with 5.37 million shares purchased from November 7 to 10 at an average of HK$42.35 each. The trades, which accounted for 19 per cent of the blue chip’s trading volume, increased his holdings to 2.65 billion shares or 72.91 per cent of the issued capital. The purchases were made on the back of the 11 per cent drop in the share price since September from HK$47.40. Henderson Land shares closed at HK$41.90 on Friday.

Buy-backs were heavy last week with three stocks that stood out due to their positive performance following buy-backs in the past.

E-commerce platform services provider Cogobuy recorded its highest acquisition prices since it started its buyback programme in December 2014 with 8.72 million shares purchased from October 28 to November 11 at HK$11.46 to HK$12.50 each or an average of HK$12.11 each. The trades accounted for 26 per cent of the stock’s trading volume. The company last bought 2.52 million shares from November 7 to 11 at an average of HK$12.04 each. The stock closed at HK$12.08 on Friday.

[Haitian] directors [Chen Ningning and Guo Mingguang] have profited from their trades in the past by buying low and selling comfortably above their purchase prices

Rechargeable tools manufacturer Techtronic bought back for the first time since December 2014 with one million shares purchased on November 14 at HK$27.81 each. The trade was made on the back of the 18 per cent drop in the share price since August from HK$33.88. Despite the fall in the share price, the counter is still up since February from HK$26.86. The stock closed at HK$28.70 on Friday.

Toys designer and manufacturer Playmates resumed buying back at lower than its acquisition prices in May with 56,000 shares purchased from November 14 to 15 at an average of HK$8.76 each. The trades were made on the back of the 18 per cent drop in the share price since May 30 from HK$10.73. The group previously acquired 113,000 shares from May 18 to 27 at an average of HK$10.48 each and 3.92 million shares from January 7 to 29 at an average of HK$8.62 each. The stock closed at HK$9.56 on Friday.

Lastly, there are strong signs that the shares of plastic injection moulding machine manufacturer Haitian are undervalued as two directors bought shares at below their sale prices in the third quarter this year. Even more significant, these two directors have profited from their trades in the past by buying low and selling comfortably above their purchase prices. Executive director Chen Ningning and non-executive director Guo Mingguang acquired a combined 200,000 shares from November 11 to 14 at HK$14.36 to HK$14.10 each or an average of HK$14.24 each. The purchases were made on the back of the 15 per cent drop in the share price since October from HK$16.74.

Chen purchased an initial 100,000 shares from November 11 to 14 at an average of HK$14.13 each. The shares bought represented 0.01 per cent of the issued capital. She previously sold her entire holdings of 270,000 shares on August 22 at HK$15.13 each.

Guo, on the other hand, acquired an initial 100,000 shares or 0.01 per cent on November 11 at HK$14.35 each. He previously sold his entire holdings of 200,000 shares from August 23 to September 22 at HK$15.50 to HK$16.20 each or an average of HK$15.85 each, 59,000 shares on June 30 at HK$13.50 each and 41,000 shares from April 19 to 20 at an average of HK$13.61 each. Those disposals were made at a profit based on the initial 300,000 shares that he acquired in December 2015 at an average of HK$11.93 each. The stock closed at HK$15.40 on Friday.

Robert Halili is managing director of Asia Insider

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