Director activity surges as insiders resume trading after reporting season ends

PUBLISHED : Sunday, 10 September, 2017, 5:51pm
UPDATED : Sunday, 10 September, 2017, 8:35pm

The director activity surged for the second straight week based on filings on the Hong Kong stock exchange from September 4 to 8, with 61 companies that recorded 302 purchases worth HK$333 million (US$42.6 million) versus 25 firms with 125 disposals worth HK$963 million.

The figures were sharply up from the previous week’s 44 companies, 192 purchases and HK$132 million on the buying side and 14 firms, 60 disposals and HK$90 million on the selling side. Aside from directors, the buy-back activity rose for the second straight week with 28 companies that posted 132 repurchases worth HK$1.234 billion based on filings from September 1 to 7.

The figures were up from the previous 5-day totals of 26 firms, 121 trades and HK$1.16 billion. The rise in the director and buy-back activity in the past two weeks was mainly due to the reporting season as directors and firms resumed their trading following the announcement of earnings results.

There were several significant insider buys last week with purchases in Dah Chong Hong Holdings, Asia Tele-Net and Technology, Fufeng Group and China Leon Inspection. The acquisitions were made following the announcement of interim results.

CEO Lai Ni Hium and CFO Kitty Fung Kit Yi acquired a combined 290,000 shares of motor vehicle distributor and logistics services provider Dah Chong Hong Holdings from August 24 to 29 at an average of HK$3.90 each.

Lai bought 100,000 shares on August 24 at HK$3.93 each, which increased his holdings to 0.550 million shares or 0.03 per cent of the issued capital. He previously acquired 250,000 shares on March 1 at HK$3.23 each and an initial 200,000 shares in June 2016 at HK$3.67 each.

Fung bought 190,000 shares from August 24 to 29 at HK$3.89 each, which boosted her stake to 0.360 million shares or 0.02 per cent. She previously acquired an initial 170,000 shares from March 1 to 9 at an average of HK$3.44 each. Lai and Fung joined the group in 2016. The company announced on August 23 a 5.5 per cent gain in first-half profit to HK$232 million. The stock closed at HK$3.76 on Friday.

Significant Points:

  • CEO Lai and CFO Fung resumed buying after the stock fell by 12 per cent from HK$4.37 on August 8
  • Lai and Fung increased their holdings by 22 per cent and 112 per cent, respectively
  • These two directors resumed buying at higher than their previous acquisition prices
  • Two executive directors, Lee Tak Wah and Lau Sei Keung, also recorded buys this year with 300,000 shares bought in March at HK$3.51 each

Chairman and managing director Lam Kwok Hing bought nearly 7 million shares of electroplating equipment manufacturer Asia Tele-Net and Technology from August 29 to September 5 at HK$1.18 to HK$1.36 each or an average of HK$1.27 each.

The trades increased his holdings to 260.981 million shares or 61.2 per cent of the issued capital. He previously acquired 63.4 million shares in February 2001 at an average of HK$0.05 each and 3.3 million shares in October 1997 at HK$0.63 each. Lam joined the group in 1995. The stock closed at HK$1.42 on Friday.

Significant Points:

  • The chairman recorded his first buys since 2001
  • The purchases accounted for 53 per cent of the stock’s trading volume
  • The purchases were made after the stock surged by as much as 43 per cent from HK$0.95 in the last week of June
  • The purchases were made after the company announced on August 28 a 2,122 per cent gain in interim profit to HK$127.389 million

Independent non-executive director Zheng Yu bought 227,000 shares of food additive and biochemical products manufacturer Fufeng Group on September 1 at HK$4.93 each. The trade increased her holdings to 0.527 million shares or 0.02 per cent of the issued capital. The company announced its interim results on August 22 with profit up by 83.4 per cent to 642.6 million yuan (US$99 million). The stock closed at HK$5.66 on Friday.

Significant Points:

  • Zheng Yu recorded her first purchase since her appointment in December 2012
  • The purchase increased her holdings by 76 per cent
  • The purchase was made on the back of the 134 per cent rebound in the share price since July 2016 from HK$2.11
  • Zheng is a seasoned veteran in the asset management field. She was managing director at PineBridge Investments (formerly known as the AIG Global Investments) in charge of private equity investment in greater China from 2008 to 2011

Chairman and CEO Li Xiangli bought 600,000 shares of coal quality assurance, quantity examination, and transport compliance services provider China Leon Inspection Holding from September 5 to 7 at

HK$1.49 to HK$1.55 each or an average of HK$1.52 each. The trades increased his holdings to 211.530 million shares or 52.88 per cent of the issued capital. The stock closed at HK$1.52 on Friday.

Significant Points:

  • The chairman recorded the first insider trades in the company since the stock was listed in July 2016
  • The purchases accounted for 77 per cent of the stock’s trading volume
  • The purchases were made after the stock rebounded by as much as 33 per cent from HK$1.17 in June
  • Despite the rebound in the share price since June, the counter is still down since November 2016 from HK$1.85
  • The purchases were made after the company announced on August 27 a 130.3 per cent increase in interim profit to 23.2 million yuan
  • The chairman’s purchase prices were higher than the IPO price of HK$0.98

Robert Halili is managing director of Asia Insider

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