MGM, Fairwood resume buying as director deals slow

Stelux chairman raises his stake and CBA snaps up China Telecom shares after both stocks rally

PUBLISHED : Monday, 12 August, 2013, 12:00am
UPDATED : Monday, 12 August, 2013, 4:22am

Buying among directors fell for a fourth week while selling rose, based on filings on the Hong Kong stock exchange last week. Eight companies recorded 39 purchases worth HK$5.07 million, against four firms with 20 disposals worth HK$19.4 million.

The purchases were sharply down from the previous week's 73 deals in 17 companies worth HK$92.3 million. On the selling side, the number of trades and value jumped from 12 disposals worth HK$15.96 million.

Buy-back activity also dropped for a fourth week with only four companies that posted 12 repurchases worth HK$3.46 million. The figures were down from six firms, 23 trades and HK$16.6 million.

The bulk of the significant trades were buy-backs in MGM China and Fairwood. The chairman of Stelux also acquired more shares after the stock rose 14 per cent from his purchase price in June, while Commonwealth Bank of Australia (CBA) acquired more shares of China Telecom after the stock gained 10 per cent.

MGM China resumed buying back after the stock rallied 20 per cent from HK$18.36 in the last week of June with 106,000 shares bought on August 7 at HK$22.05 each. The buy-back was also made after the gaming firm announced on August 6 a 5.83 per cent drop in first-half profit to HK$2.47 billion.

The group previously acquired 715,000 shares from March 1 to June 17 at an average of HK$19.18 each. The acquisitions since March are the company's first buy-backs since the stock was listed in June 2011. The buy-back prices were higher than the initial public offering price of HK$15.34.

The stock closed at HK$22.30 on Friday.

Fairwood picked up where it left off last month with 13,000 shares bought on August 8 at HK$16.12 each. The fast-food retailer previously acquired 277,000 shares from July 24 to 31 and 250,000 shares from June 27 to 28 at an average of HK$16.04 each. The repurchases since June were made on the back of a drop in the share price since May from HK$17.80.

Despite the fall in the share price, the buy-backs were made at sharply higher than its previous purchase prices, based on the 7.46 million shares that the company acquired from June 2004 to April 2012 at an average of HK$8.88 each.

The stock closed at HK$16.18 on Friday.

Chairman and chief executive Joseph Wong resumed buying shares of eyeglass and watch retailer Stelux after the stock rose 14 per cent from his acquisition price in June with 48,000 shares purchased on August 6 at HK$2.50 each. The trade raised his holdings to 57.84 per cent of the issued capital.

Wong previously acquired 56,000 shares on June 26 at HK$2.20 each.

The recent purchase bodes well for shareholders as the stock rose an average of 24 per cent six months after Wong bought shares, based on 123 acquisitions since 1993. The stock recorded a price gain six months after on 70 per cent of those acquisitions. The stock is already up 9 per cent from his last purchase price, with its close at HK$2.73 on Friday.

CBA acquired more shares of mainland telecommunications play China Telecom with a filing on August 7 of 47.7 million shares at HK$3.91 each. The trade boosted its holdings to 14.28 per cent.

The filing was made on the back of a 10 per cent rebound in the share price since the last week of June from HK$3.56.

The group previously reported purchases on March 13 of 17.2 million shares at HK$4 each and on February 28 of 17.05 million shares at HK$4.02 per share.

Overall, CBA's stake is up 18 per cent since February. Aside from the purchases this year, the firm acquired a net 411 million shares last year at HK$3.43 to HK$4.32 each.

CBA became a substantial shareholder - for the third time since September 2006 - in January 2010 following the purchase of 38 million shares at HK$3.30 each, which raised its interest to 5.1 per cent.

The stock closed at HK$3.91 on Friday.

Robert Halili is managing director of Asia Insider