The Insider
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Buy-back value rises sharply as Cheung Kong Property repurchases shares worth HK$861 million

PUBLISHED : Sunday, 22 January, 2017, 10:06pm
UPDATED : Sunday, 22 January, 2017, 10:06pm

There was cautious trading by directors and companies ahead of the inauguration of the US president, with insider activity flat while buy-backs fell, based on filings to the Hong Kong stock exchange in the third week of January.

A total of 37 companies recorded 187 director purchases worth HK$370 million against 17 firms with 75 disposals worth HK$83 million. The buy figures were not far off from the previous week’s 36 companies, 183 purchases and HK$404 million. On the selling side, the number of firms was unchanged while the number of disposals was up from 66 transactions. The value, on the other hand, was sharply down from the previous week’s HK$153 million.

Meanwhile buy-back activity plunged, with only 16 companies that posted 65 repurchases, based on filings from Monday to Thursday. The figures were sharply down from the previous week’s five-day totals of 24 firms and 117 transactions. The value, however, amounted to HK$1.02 billion, sharply up from HK$281 million.

The huge value was mainly due to the repurchases by Cheung Kong Property Holdings of 16.83 million shares worth HK$861 million. The deals, which accounted for 39 per cent of the stock’s trading volume, were made from January 16 to 19 at an average of HK$51.18 each. It resumed buying back after the stock rebounded as much as 11.5 per cent from HK$47 on December 29.

The recent buy-backs were not surprising as firms tend to invest in their own shares if they do not have viable investments on the horizon. Cheung Kong Property, along with other local peers, have been routinely outbid in government land auctions as their mainland rivals continue to muscle in on the property market in the city.

Before the repurchases this month, Cheung Kong Property acquired 21.5 million shares from December 5 to 8 at an average of HK$51.38 each, 646,000 shares in May at HK$45.24 each and 13.5 million shares in March at HK$46.73 each. The stock closed at HK$50.95 on Friday.

There were also several significant transactions on both the buying and selling side. The chairman of China NT Pharma Group recorded his first purchase since 2011 following the steep fall in the company’s share price.

Meanwhile, there are strong signs that the shares of Newtree Group Holdings are undervalued as its chairman turned positive after selling heavily at progressively lower prices from September 2015 to October last year. The disposals were also made after the recent sharp fall in the share price.

There are also strong positive signals in Huajun Holdings with two directors buying heavily in the past month. The aggressive buying, however, was surprising as they were made following the sharp rebound in the share price.

On the negative side, investors should trade with caution on First Pacific due to sales by three directors this month. Meanwhile, there was a rare sale by the chairman of New Century Real Estate Investment Trust following the rebound in the share price. There are also bearish signals in Rykadan Capital with a director recording a first-time sale following the sharp fall in the share price.

Chairman Ng Tit recorded his first on-market trades in generic drugmaker NT Pharma since May 2011 with 5.9 million shares bought from January 9 to 16 at an average of HK$1.62 each. The trades, which accounted for 67 per cent of the stock’s trading volume, increased his holdings to 38.21 per cent of the issued capital.

The purchases were made on the back of the 31 per cent drop in the share price since May from HK$2.36. Despite the fall in the share price, the stock is still up since September 2012 from 69 HK cents.

Ng previously acquired 500,000 shares in May 2011 at HK$3 each.

The stock closed at HK$1.57 on Friday.

Chairman Wong Wai-sing turned positive in household and clinical hygienic disposable products manufacturer and distributor Newtree after the stock fell 17 per cent from 56 HK cents in November with 15 million shares bought from January 12 to 13 at 46 HK cents each. The trades increased his holdings to 8.6 per cent of the issued capital. He previously sold 112.75 million shares from September to October at an average of 52 HK cents each and 40.3 million shares in March at an average of 55 HK cents each.

Before those disposals, Wong sold a net six million shares from January to February last year through open- and off-market trades at an average of HK$2.13 each and a net 1.32 million shares from September to October 2015 at an average of HK$3.33 each. The counter closed at 44.5 HK cents on Friday.

Chairman Meng Guangbao and chief executive Wu Jiwei acquired shares of printing, packaging and paper product manufacturer Huajun with a combined 66.75 million shares bought from December 23 last year to January 6 this year at an average of 78 HK cents each. The trades, which accounted for 83 per cent of the stock’s trading volume, were made after the stock rebounded as much as 71 per cent from 48 HK cents on December 22.

Meng recorded his first on-market trades since August 2015 with 66.5 million shares bought from December 30 last year to January 6 this year at an average of 78.2 HK cents each. The trades increased his holdings to 67.69 per cent of the issued capital. He previously acquired 34 million shares from July to August 2015 at an average of HK$1.16 each.

Wu, on the other hand, acquired 264,000 shares from December 23 to 30 at an average of 60 HK cents each, which boosted his stake to 2.64 per cent. Those were his first on-market trades since his appointment in September 2014.

The counter closed at 73 HK cents on Friday.

Executive directors Robert Nicholson and Edward Tortorici and independent non-executive director Edward Chen Kwan-yiu recorded sales in telecommunications, consumer food products, infrastructure and natural resources investment management firm First Pacific with a combined 2.37 million shares sold from January 6 to 18 at an average of HK$5.67 each. The trades accounted for 15 per cent of the stock’s trading volume.

Nicholson recorded his first on-market trades since January 2015 with 850,000 shares sold from January 12 to 18 at an average of HK$5.62 each. The trades reduced his holdings to 0.72 per cent of the issued capital. The disposals were made on the back of the 18 per cent rebound in the share price since May from HK$4.75. Despite the rebound in the share price, the counter is still down since February 2015 from HK$8.01. He previously sold 886,000 shares in January 2015 at HK$7.96 each.

Tortorici, on the other hand, sold 1.02 million shares from January 6 to 16 at an average of HK$5.73 each, which lowered his stake to 1.29 per cent. He previously sold 312,000 shares from December 16 to 20 at an average of HK$5.71 each and 1.26 million shares from October 18 to 31 at an average of HK$5.86 each.

Chen sold 500,000 shares from January 12 to 18 at an average of HK$5.62 each, which reduced his holdings to 0.14 per cent. The disposals were made at a profit, based on the 500,000 shares that he acquired through exercise of options from January 12 to 18 at HK$4.95 each. He previously sold one million shares from December 2011 to January 2012 through options-related sales at an average of HK$8.69 each and 1.5 million shares from July to August 2007 at an average HK$5.73 each.

The stock closed at HK$5.52 on Friday.

Non-executive chairman Chen Miaolin recorded his first on-market trade in hotel reit New Century since July with 1.6 million units sold on January 18 at HK$2.49 each. The trade reduced his holdings to 62.33 per cent of the issued capital. The sale was made on the back of the 15 per cent rebound in the unit price since September from HK$2.16. He previously sold 800,000 units in July at HK$2.40 each and 604,000 units in April at HK$2.80 each.

His sale prices were lower than the listing price of HK$4.20. The unit trust closed at HK$2.49 on Friday.

Non-executive director Ng Tak-kwan recorded his first on-market trade in construction and interior decorative materials distributor Rykadan since the stock was listed in August 2009 with 3.5 million shares sold on January 19 at HK$1.05 each. The trade reduced his holdings to 16.85 per cent of the issued capital.

The sale was made on the back of the 24 per cent drop in the share price since October from HK$1.38. The counter is also down since August 2014 from HK$2.07. The stock closed at HK$1.10 on Friday.

Robert Halili is managing director of Asia Insider

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