Corporate shareholder trading quiet ahead of reporting season

With the busy reporting period running from February to April, directors and listed-firms are prohibited from trading one to two months prior to the announcement of results

PUBLISHED : Sunday, 12 February, 2017, 4:42pm
UPDATED : Sunday, 12 February, 2017, 10:44pm

The director activity fell for the third straight week based on filings on the Hong Kong Stock Exchange from February 6 to 10, with seven companies that recorded 18 purchases worth HK$16.7 million versus three firms with seven disposals worth HK$7.5 million. The buy figures were sharply down from the previous week’s three-day totals of 13 companies, 37 purchases and HK$83.2 million.

On the selling side, the number of firms and trades were down from the previous week’s five companies and 17 disposals. The sell value, however, was sharply up from the previous week’s sales worth US$1.9 million.

While the buying by directors plunged last week, the buyback activity was flat with nine companies that posted 40 repurchases worth HK$55.9 million based on filings from Monday to Thursday. The number of firms and trades were up from the previous week’s three-day totals of six firms and 21 trades while the value was down from the previous week’s turnover of HK$78.3 million.

The low corporate shareholder activity in the past few weeks is not surprising due to the busy reporting period that runs from February to April as directors and listed-firms are prohibited from trading one to two months prior to the announcement of results.

Despite the continued lull in the trading activity, there were several buyback, director and fund manager filings last week. On the buybacks front, Playmates Holdings has been quietly buying back on the way up since November 2016. On the flip side, Cogobuy Group has been repurchasing shares at progressively lower prices since October last year with buybacks recorded in 50 out of the past 68 trading days.

On the directors’ side, the chairman and CEO of Regina Miracle International recorded his first buys since listing after the stock fell by 44 per cent. On the institutional shareholders’ front, purchases by three fund managers in Vtech Holdings since November last year indicate that the stock is undervalued at over HK$94 per share. Meanwhile, the Singapore Government’s sovereign wealth fund GIC Private Limited ceased to be a substantial shareholder of China Telecom Corporation. The sale by GIC in China Telecom was made at below its initial filing price in August last year.

Playmates Holdings Limited (635)

Toy designer and manufacturer Playmates Holdings has been buying back at progressively higher prices since November last year with 2 million shares purchased from November 14, 2016 to February 9 at HK$8.70 to HK$10.50 each or an average of HK$10.20 each. The group last bought 38,000 shares on February 6 at HK$10.50 each. Prior to the repurchases since November 2016, the company acquired 113,000 shares in May 2016 at an average of HK$10.48 each and 3.92 million shares in January 2016 at an average of HK$8.62 each. Prior to the buybacks since 2016, the group acquired 37.2 million shares from March 2011 to December 2015 at HK$2.32 to HK$11.30 each or an average of HK$5.59 each and 18.25 million shares from 1997 to 2010 at HK$0.59 to HK$2.50 each or an average of HK$1.04 each. Investors should note that the stock rose by an average of 14 per cent three months after the group bought shares based on 245 filings since 2000. The stock recorded a price gain three months after on 64 per cent of those filings. The counter closed at HK$10.60 on Friday.

Cogobuy Group (400)

E-commerce platform services provider (for electronic goods) Cogobuy Group has been buying back at progressively lower prices since October last year with 31.2 million shares from October 28, 2016 to February 7 at HK$12.50 to HK$10.30 each or an average of HK$11.82 each. The buybacks accounted for 20 per cent of the stock’s trading volume. The company repurchased shares on 50 out of the 68 trading days during that period. The group last bought 83,000 shares from February 6 to 7 at an average of HK$10.56 each.

Prior to the repurchases since October 2016, the company acquired 5.42 million shares in May 2016 at HK$10.50 to HK$10.96 each or an average of HK$10.64 each and 4.5 million shares from January to February 2016 at HK$7.90 to HK$8.30 each or an average of HK$8.08 each. Prior to the buybacks since January 2016, the group acquired 200,000 shares in July 2015 at HK$4.90 each and 25.64 million shares from December 2014 to February 2015 at HK$3.90 to HK$4.50 each or an average of HK$4.22 each. The repurchases since December 2014 are the company’s first buybacks since listing in July 2014. The group’s last buyback price was sharply higher the IPO prices of HK$3.20 to HK$4.48. The stock closed at HK$11.08 on Friday.

Regina Miracle International Holdings Ltd (2199)

Chairman and CEO Hung Yau Lit recorded the first on-market trades by a director in intimate and sports apparel designer and manufacturer Regina Miracle International since the stock was listed in October 2015 with 2 million shares purchased from February 6 to 7 at HK$5.83 to HK$6.62 each or an average of HK$6.04 each. The trades, which accounted for 18 per cent of the stock’s trading volume, increased his holdings to 887.000 million shares or 72.45 per cent of the issued capital. The purchases were made on the back of the 44 per cent drop in the share price since September 2016 from HK$10.82. The counter is also down since January 2016 from HK$12.60. The chairman’s purchase prices were near the IPO prices of HK$5.38 to HK$6.38 each. The stock closed at HK$6.53 on Friday.

Vtech Holdings Limited (303)

The Capital Group Companies recorded its first notice in high-tech educational and consumer electronic products manufacturer Vtech Holdings since March 2016 with a purchase-related filing on February 1 of 1.2 million shares at HK$94.59 each. The trade increased its holdings to 37.884 million shares or 15.08 per cent of the issued capital. The filing was made on the back of the 10 per cent drop in the share price since December 2016 from HK$104.90. Despite the fall in the share price, the counter is still up since May 2016 from HK$78.60. The group previously reported a purchase-related filing in March 2016 of 521,000 shares at HK$91.78 each and a purchase-related filing in January 2016 of 229,000 shares at HK$76.00 each.

Prior to its notices since 2016, the fund manager reported a purchase-related filing in November 2014 of 740,000 shares at HK$101.23 each, a purchase-related filing on December 27, 2013 of 792,000 shares at HK$101.91 each and an initial filing (for the second time since September 2012) on December 17, 2013 of 161,000 shares at HK$101.95 each, which raised its interest to 5.0 per cent. Overall, The Capital Group’s stake is up by 202 per cent since that initial filing in December 2013.

Investors should note that JPMorgan Chase & Co and Templeton Asset Management boosted their respective stakes to over 5 per cent of the issued capital in the fourth quarter of 2016. JPMorgan reported an initial filing (for the eighth time since May 2012) on December 14, 2016 of 10.95 million shares at HK$96.11 each, which boosted its stake by 137 per cent to 18.946 million shares or 7.54 per cent. Prior to that initial filing, the group ceased to be a substantial shareholder in July 2014 following the sale of 211,000 shares via off-market trade at an undisclosed price, which lowered its interest to 4.91 per cent. Templeton Asset Management, on the other hand, reported an initial filing (for the second time since August 7) on November 2, 2016 of 64,600 shares at HK$94.06 each, which increased its holdings to 12.593 million shares or 5.01 per cent. Prior to that initial filing, the fund manager ceased to be a substantial shareholder in September 2016 following the sale of 160,200 shares at HK$88.74 each, which lowered its interest to 4.97 per cent. The stock closed HK$88.65 on Friday.

China Telecom Corporation Limited (728)

GIC Private lowered its stake in mainland telecom giant China Telecom Corporation to below 5 per cent of the issued capital at lower than its initial filing price in August 2016. The group ceased to be a substantial shareholder on February 1 following the sale of 7.4 million shares at HK$3.67 each, which reduced its holdings to 688.019 million shares or 4.96 per cent. The filing was made on the back of the 12 per cent drop in the share price since October 2016 from HK$4.15. The group previously reported an initial filing (for the second time since July 2016) in August 2016 of 3.6 million shares at HK$3.91 each, which raised its interest to 5.01 per cent. Investors should note that Templeton Global Advisors became a substantial shareholder on November 11, 2016 following the purchase of 50.8 million shares at HK$3.81 each, which boosted its stake by 8 per cent to 703.545 million shares or 5.07 per cent. The stock closed at HK$3.77 on Friday.

Li & Fung Limited (494)

Commonwealth Bank of Australia (CBA) recorded a sale in blue chip consumer products exporter Li & Fung at lower than its acquisition price from November 2016 to January with 27.36 million shares sold on February 6 at HK$3.01 each. The trade reduced its holdings to 1.403 billion shares or 16.68 per cent of the issued capital. The group previously reported a purchase-related filing on January 20 of 438,000 shares at HK$3.40 each and a purchase-related filing on November 21, 2016 of 52 million shares at HK$3.48 each. Prior to those acquisitions, the shareholder reported a disposal-related filing in September 2016 of 5.07 million shares at HK$4.05 each. Prior to that sale, the fund manager acquired 337.6 million shares from March to July 2016 at HK$4.87 to HK$3.91 each and a purchase-related filing in March 2016 of 31.5 million shares at HK$4.41 each.

Prior to its notices since 2016, the group acquired 406 million shares from January to September 2015 at HK$7.39 to HK$4.98 each and an initial filing (for the second time since February 2013) on January 23 of 212 million shares at HK$7.39 each, which raised its interest by 53 per cent to 608.985 million shares or 7.28 per cent. Investors should note that The Capital Group Companies sold 84.4 million shares from December 9 to 12, 2016 at an average of HK$3.42 each, which lowered its stake by 11 per cent to 673.130 million shares or 7.99 per cent.

The group previously acquired 161 million shares from October 2015 to January 2016 at HK$6.10 to HK$4.38 each and sold 332 million shares from April 2014 to July 2015 at HK$11.70 to HK$6.10 each. Overall, The Capital Group’s stake is down by 27 per cent since April 2014. Prior to those net sales, the fund manager acquired a net 509 million shares from August 2011 to February 2014 at HK$13.28 to HK$10.49 each and an initial filing (for the second time since September 2008) in August 2011 of 12 million shares at HK$12.80 each, which raised its interest to 5.1 per cent. The counter closed at HK$3.42 on Friday.

Robert Halili is managing director of Asia Insider