In a bullish sign, these five companies bought back their own shares in recent weeks
Mainland residential property developer Evergrande Real Estate Group along with other Hong Kong-listed companies bought back HK$3.7 billion worth of shares recently
Insider activity was basically flat this past week with 44 companies recording 197 transactions based on filings to the Hong Kong stock exchange.
However, the trading week of April 18 to 21, which was cut short by the Easter Monday holiday, saw transactions worth HK$555 million, up sharply from the previous week’s turnover of HK$325 million.
While the buying by directors was flat, buy-back activity surged with 23 companies recording trades worth HK$3.7 billion from April 13 to 20.
Most of the buy-back activity can be traced to mainland residential property developer Evergrande Real Estate Group, which repurchased 375 million shares worth HK$3.22 billion. The company started this recent buying spree with its largest transaction in terms of value since it started its buy-back programme in 2011, picking up nearly 203 million shares on April 13 worth HK$1.736 billion. The stock, incidentally, rose by more than 73 per cent from the company’s buy-back on July 15, 2015 through to the end of that year.
Future share price gains may be hard pressed as the recent repurchases were made on the back of a sharp rise in the share price since December 2016.
Another record was also broken last week with the group recording its highest buy-back price to date. The repurchases in the past month were made after the group announced in March that it would suffer a 51.3 per cent drop in profit attributable to shareholders to 5.09 billion yuan. The heavy buy-backs suggest that the group is investing its capital on its own shares as there are no better alternative investments on the horizon. This would not be surprising as the mainland government has introduced various measures to cool the surging property market. The stock closed at HK$9.03 on Friday.
Last week also saw first time buy-backs in Colour Life Services Group and Vantage International, as well as repurchases in utility plays China Water Affairs Group and Hong Kong and China Gas.
Real estate management firm Colour Life Services Group bought back 260,000 shares purchased from April 19 to 20 at an average of HK$4.57 apiece, reflecting the first since its listing in June 2014. The trades were made on the back of the 30 per cent drop in the share price since August 2016. The group’s buy-back price was lower than the IPO price of HK$4.60. The stock closed at HK$4.48 on Friday.
Building construction and civil engineeringservices provider Vantage International bought back 3.8 million shares from April 18 to 20 at an average of HK$1.13 apiece, the first purchases since its listing in September 2000. The trades were made on the back of a 32 per cent rebound in the share price since March. The stock closed at HK$1.18 on Friday.
Utility firm China Water Affairs Group bought back 628,000 shares purchased from April 19 to 20 at an average of HK$5.16 apiece.
The group previously acquired 992,000 shares from December 6 to 12, 2016 at an average of HK$4.87 each and 25.62 million shares from April to October 2016 at an average of HK$4.54 each. The stock closed at HK$5.13 on Friday.
Blue chip utility firm Hong Kong and China Gas recorded its first buy-backs since October 2015 with 1 million shares purchased from April 18 to 19 at an average of HK$15.34 apiece. The trades were made on the back of a 13 per cent rebound in the share price since December 2016. Investors should note that the stock rose by an average of 8 per cent three months after and 14 per cent six months after the group repurchased its shares, according to calculation based on 313 filings since 2000. The stock recorded a price gain three months and six months after on 94 per cent of those acquisitions. The blue chip closed at HK$15.38 on Friday.
Robert Halili is managing director of Asia Insider