COMMENTARY
The Insider
by

Retail sector dominates buybacks and shareholder dealings

While buying plunged, buyback activity rose for the first time in five weeks with 10 firms posting 60 repurchases worth HK$588 million

PUBLISHED : Sunday, 13 August, 2017, 5:16pm
UPDATED : Sunday, 13 August, 2017, 9:38pm

Buying among directors fell for the third straight week, while selling rebounded, based on filings on the Hong Kong Stock Exchange from August 7 to 11.

Buyers outweighed sellers with 21 companies recording 103 purchases worth HK$76 million (US$9.72 million) versus eight firms with 29 disposals worth HK$16 million.

The buy figures were sharply down from the previous week’s 32 companies, 172 purchases and HK$265 million value.

Sales, on the other hand, were up from the previous week’s 5 firms, 21 disposals and HK$7.4 million.

But as buying plunged, buyback activity rose for the first time in five weeks with 10 firms posting 60 repurchases worth HK$588 million. The figures were up from the previous week’s seven companies, 38 trades and HK$547 million.

The retail sector took the spotlight last week with rare buybacks in Esprit Holdings and insider buys in Le Saunda Holdings.

There was even more bullish activity in International Housewares Retail Company Limited with insider buys and buybacks in the past month.

In all three cases, the purchases were made following falls in their share price.

Global fashion retailer Esprit Holdings bought back 3.44 million shares from August 9 to 10 at an average of HK$4.13 each.

The group previously acquired 2.6 million shares in July 2008 at an average of HK$77.75 each. The stock closed at HK$4.21 on Friday.

It was the company’s first buyback since 2008, its second ever, and accounted for 8 per cent of the stock’s trading volume.

The buybacks were made on the back of the 76 per cent decline in the share price since November 2013 from HK$16.86, and as it announced it expected to post a net profit of HK$50 to HK$80 million in its upcoming annual results in October, a significant increase from the previous year’s earnings of HK$21 million

Founder and non-executive director Marces Lee Tze Bun bought 1.5 million shares of shoe manufacturer & retailer Le Saunda Holdings, his first purchase of the company’s shares since September 2016, from August 1 to 10 at an average of HK$1.49 each.

The trades increased his holdings to 370.441 million shares or 52.47 per cent of the issued capital.

He previously acquired 308,000 shares in September and 9.76 million shares from June to July 2016 at an average of HK$1.62 each.

Prior to his purchases since 2016, the director sold 684,000 shares from May to June 2015 at an average of HK$3.89 each. Prior to those sales, Lee bought 32 million shares from June 2004 to June 2012 at HK$0.50 to HK$4.00 each or an average of HK$1.41 each. The stock closed at HK$1.50 on Friday.

The purchases accounted for 59 per cent of the stock’s trading volume, and were clearly made for profit. He unloaded the stock in 2015 at HK$3.89 each after recording buys from 2004 to 2012 at an average of HK$1.41 each. They were made on the back of the 22 per cent drop in the share price since April from HK$1.92

There were acquisitions, too, by chairwoman Ngai Lai Ha and buybacks in houseware retail stores operator International Housewares Retail Company worth a combined 1.786 million shares from buys between July 31 and August 7 at an average of HK$1.47 each.

The purchases were made on the back of the 12 per cent drop in the share price since June from HK$1.66, and accounted for 7 per cent of the stock’s trading volume.

Ngai picked up where she left off in May with 743,000 shares bought from July 31 to August 3 at an average of HK$1.47 each. The trades increased her holdings to 335.844 million shares or 46.73 per cent of the issued capital.

She previously acquired 4.6 million shares from March 30 to May 26 at HK$1.60 to HK$1.73 each or an average of HK$1.68 each.

Prior to her purchases this year, she acquired 5.47 million shares from January to April 2016 at HK$0.99 to HK$1.08 each or an average of HK$1.03 each. She was given the chair in March, but had served as a director since the company’s incorporation since 1991.

The group announced on July 28, a 31.6 per cent gain in annual profit to HK$87.492 million

On the other hand, the company bought back 300,000 shares on August 7 at HK$1.46 each. The group had previously acquired 7.38 million shares from March 2015 to January 2016 at HK$2.05 to HK$1.07 each or an average of HK$1.68 each.

Also positive this year is honorary chairman Peter Lau Pak Fai with 300,000 shares purchased on March 27 at HK$1.60 each, which boosted his stake to 335.383 million shares or 46.66 per cent.

He previously bought 300,000 shares on February 27 at HK$1.63 each and 2.3 million shares from January 3 to February 2 at HK$1.62 to HK$1.77 each or an average of HK$1.71 each.

Prior to his purchases this year, Lau bought 740,000 shares in December 2016 at an average of HK$1.65 each, 2.35 million shares in January 2016 at HK$1.18 to HK$1.05 each or an average of HK$1.11 each and 1.21 million shares in December 2015 at an average of HK$1.12 each. The stock closed at HK$1.40 on Friday.

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