Hong Kong firms and insiders pick up shares following price gains

PUBLISHED : Sunday, 02 October, 2016, 10:18pm
UPDATED : Monday, 16 January, 2017, 10:28am

The buying rose after falling for two straight weeks while the selling among directors remained high based on filings on the Hong Kong stock exchange in the last week of September. A total of 26 companies recorded 104 purchases worth HK$103 million versus 18 firms with 67 disposals worth HK$257 million.

The number of purchases was not far off from the previous week’s 109 acquisitions while the number of companies and value were up from the previous week’s 22 firms and HK$83 million. On the selling side, the number of companies and trades were not far off from the previous week’s 20 companies and 69 disposals. The sell value, however, was sharply up from the previous week’s disposals worth HK$88 million.

Meanwhile, the buyback activity rebounded last week with 23 companies that posted 121 repurchases worth HK$966 million. The number of firms and trades were up from the previous week’s 17 companies and 105 transactions. The value, although high, was down from the previous week’s turnover of HK$1.143 billion.

The buyback and director activity picked up significantly at the end of the third quarter. The volume was especially heavy with 42 stocks that recorded purchases accounting for more than 5 per cent of trading volume with an average volume of 32 per cent. On the selling side, 15 firms recorded volumes of more than 5 per cent with an average of 21 per cent.

It is not surprising to see companies and directors record buys to support their share prices following steep price falls. What is eye-catching are firms and insiders picking up shares following price gains. Five stocks that recorded buybacks and director purchases following the rise in their share prices are HC International, Allied Group, Haier Electronics, Xinyi Automobile Glass and Eagle Nice Holdings. The acquisitions in these firms indicate that these stocks are still undervalued at current levels.

Business information solutions and services provider HC International bought back for the first time since listing in December 2003 with 1.49 million shares purchased from September 28 to 30 at an average of HK$5.80 each. The trades, which accounted for 13 per cent of the stock’s trading volume, were made on the back of the 74 per cent rebound in the share price since January from HK$3.33. Despite the rebound in the share price, the counter is still down since March 2014 from HK$22.00. Investors should note that CEO Guo Jiang acquired 1.5 million shares from May 19 to 26 at an average of HK$4.28 each, which increased his holdings to 192.710 million shares or 21.06 per cent of the issued capital. He previously acquired 1.66 million shares from November 2014 to January 2015 at HK$8.98 to HK$6.31 each or an average of HK$8.18 each. The purchases by the CEO since November 2014 are his first on-market trades since the stock was listed in December 2003. Mr. The stock closed at HK$5.75 on Friday.

The buyback and director activity picked up significantly at the end of the third quarter

Financial services firm and property investor Allied Group resumed buying back at higher than its acquisition prices earlier this year with 36,000 shares purchased from September 26 to 30 at HK$39.40 to HK$40.10 each or an average of HK$39.92 each. The trades accounted for 75 per cent of the stock’s trading volume. The group previously acquired 30,000 shares from April 26 to May 27 at HK$38.00 to HK$38.50 each or an average of HK$38.07 each and 4,000 shares on January 19 at HK$35.00 each. Prior to the repurchases this year, the company acquired 5.09 million shares from January to December 2015 at HK$32.00 to HK$44.20 each or an average of HK$38.05 each, 23.99 million shares from November 2011 to June 2014 at HK$17.00 to HK$34.90 each or an average of HK$20.48 each and 16.7 million shares from February 2005 to February 2009 at HK$34.05 to HK$8.80 each or an average of HK$15.32 each. Investors should note that the stock rose by an average of 164 per cent six months after the company bought shares based on 369 filings since 2000. The stock recorded a price gain six months after on 71 per cent of those filings. The stock closed at HK$40.20 on Friday.

Electrical appliances manufacturer and dealer Haier Electronics Group resumed buying back at higher than its acquisition prices in February with 394,000 shares purchased from September 27 to 28 at an average of HK$12.92 each. Although the group resumed buying back this month at a higher price, the repurchases were made on the back of the 9 per cent drop in the share price since August from HK$14.26. Despite the fall in the share price, the counter is still up since June from HK$11.04. The group previously acquired 1.15 million shares from February 15 to 18 at HK$10.86 to HK$11.30 each or an average of HK$11.09 each. Prior to the repurchases this year, the company acquired 652,000 shares in September 2015 at an average of HK$12.77 each and 2.1 million shares from September to October 2008 at HK$0.79 to HK$0.38 each or an average of HK$0.616 each. Investors should note that the stock rose by an average of 51 per cent three months after the company bought shares based on 22 filings since 2008. The stock recorded a price gain three months after on 100 per cent of those filings. The stock closed at HK$12.82 on Friday.

Non-executive chairman Tung Ching Sai resumed buying shares of vehicle glass repairs and replacement services provider Xinyi Automobile Glass after the stock rose by as much as 40 per cent from his acquisition prices in July with 2.516 million shares purchased from September 22 to 23 at HK$1.64 to HK$1.72 each or an average of HK$1.68 each. The trades, which accounted for 16 per cent of the stock’s trading volume, increased his holdings to 308.307 million shares or 57.08 per cent of the issued capital. He previously acquired 17.6 million shares from July 11 to 13 at HK$1.23 to HK$1.33 each or an average of HK$1.28 each. The purchases by the chairman since July are the first corporate shareholder trades in the company since the stock was listed on July 11. The chairman’s purchase prices were higher than the IPO prices of HK$0.55 to HK$0.70. The stock closed at HK$1.63 on Friday.

Buyback activity rebounded last week with 23 companies that posted 121 repurchases worth HK$966 million

Chairman and co-founder Chung Yuk Sing resumed buying shares of sportswear and garments manufacturer and distributor Eagle Nice Holdings after the stock rose by as much as 31 per cent from his acquisition prices earlier this year with 100,000 shares purchased from September 28 to 29 at HK$2.30 each. The trades increased his holdings to 80.650 million shares or 16.14 per cent of the issued capital. He previously acquired 2.86 million shares from June 28 to July 15 at HK$1.76 to HK$2.03 each or an average of HK$1.92 each. Prior to his trades this year, the chairman acquired 3.64 million shares from February to August 2015 at HK$1.42 to HK$1.84 each or an average of HK$1.69 each, 1.2 million shares in August 2014 at an average of HK$1.26 each and 200,000 shares in August 2008 at an average of HK$1.53 each. Prior to those purchases, the chairman sold 22 million shares in March 2005 at HK$4.13 each and 1.5 million shares in April 2004 at HK$2.96 each. Investors should note that the stock rose by an average of 15 per cent three months after the chairman bought shares based on 71 purchases since 2008. The stock recorded a price gain three months after on 83 per cent of those acquisitions. The stock closed at HK$2.30 on Friday.

Robert Halili is managing director of Asia Insider