Directors' purchases dive but buybacks still heavy last week

INSIDER activity fell last week - based on filings with the Singapore Exchange - with 24 companies recording 40 purchases worth $6.5 million versus two firms with five disposals worth $720,000. The buys were sharply down from the previous week's 41 firms, 92 trades, and $21.3 million, while the sales were down from the previous week's four companies, eight trades, and $2.1 million.

Directors are positive so far this month with net buy totals of 61 firms, 192 trades, 74 insiders, and $32.7 million. The figures are based on 68 companies, 207 purchases, 81 directors, and $36.1 million on the buying side and seven firms, 15 disposals, seven insiders, and $3.3 million on the selling side.

While the buying by directors fell sharply last week, the buyback activity among listed firms remained high with 25 firms that posted 89 repurchases worth $12.8 million. The figures were consistent with the previous week's 22 companies, 90 trades, and $8.4 million.

The heavy buybacks in the past two weeks pushed the trade totals this month to 33 firms, 255 trades, and $29.6 million. The trade figures so far in March are already higher than the 20 companies, 99 trades, and $14.5 million in February and 21 firms, 151 trades, and $13.8 million in January and there are still seven days remaining this month.

There were several significant trades in the local market last week. On the negative side, investors should trade with caution in Frasers Commercial Trust, China Hongxing Sports, and Celestial NutriFoods due to heavy sales by substantial shareholders.

On the positive side, there is strong price support in Leeden Ltd with buybacks by the company and purchases by two executive directors this month. There were also first-time buybacks by Wanxiang International last week due to the decline in its share price since June last year.

Frasers Commercial Trust
The Capital Group Companies, Inc reduced its stake in Frasers Commercial Trust this month at sharply lower than its purchase prices with 6.6 million units sold on March 12 at an estimated price of 14 cents each. The trade reduced its deemed holdings by 9 per cent to 65.9 million units or 8.9 per cent of the issued capital.

The group previously acquired 12.9 million units from March 26 to June 11, 2008 at estimated prices of 82 cents to 86 cents each. Prior to those purchases, the fund manager sold a net 44.9 million units from July 2007 to March 2008 at estimated prices of $0.70 to $1.18 each.

The Capital Group Companies became a substantial shareholder in March 2006 following the purchase of an initial 31.9 million units or 6.4 per cent at $1.00 each. The unit trust closed at 13.5 cents on Friday.

China Hongxing Sports
Wasatch Advisors, Inc recorded its first sale in mainland sports shoes, apparel and accessories manufacturer and seller China Hongxing Sports since it became a substantial shareholder in September 2008 with 28.9 million shares sold on March 12 at an estimated price of 6 cents each. The trade reduced its deemed holdings by 16 per cent to 157.7 million shares or 5.7 per cent. The disposal was made at sharply lower than its purchase prices based on the 57.7 million shares that it acquired from September 18, 2008 to March 3 at estimated prices of 9 cents to 29 cents each.

Wasatch Advisors reported an initial filing (for the fourth time since June 2007) on Sept 8, 2008 of 7.5 million shares at 36 cents each, which raised its interest to 5.1 per cent.

The sentiment is not entirely negative this month as The Overlook Partners' Fund LP acquired 25 million shares on March 4 at an estimated price of 9.5 cents each, which increased its direct holdings by 18 per cent to 165.05 million shares or 6.0 per cent. The group previously reported an initial filing on Feb 24 of 15 million shares at 17 cents each, which raised its interest to 5.3 per cent. Investors should note that chairman Wu Rongguang purchased one million shares in November 2008 at 19 cents each, which increased his direct holdings to 463.1 million shares or 16.8 per cent. He previously acquired 2 million shares in January 2008 at 81 cents each. The stock closed at 9 cents on Friday.

Celestial NutriFoods
Cheung Wai Kwok ceased to be a substantial shareholder of soybean-based food products manufacturer Celestial NutriFoods following the sale of 6.2 million shares from March 3 to 13 at estimated prices of 9 cents to 12.5 cents each. The trades reduced his direct holdings by 16 per cent to 31.6 million shares or 4.9 per cent. The disposals were made on the back of the decline in the share price since June 2008 from 89 cents. The counter is also sharply down since October 2007 from $1.65.

Mr Cheung's previous on-market trade was in March 2005 when he acquired 5 million shares at 38 cents each. Celestial NutriFoods announced its Q4 results on Feb 27 with net profit down by 26.1 per cent to 96.876 million yuan for the three months to Dec 31, 2008. Earnings for the full-year, however, rose by 19.1 per cent to 499.158 million yuan. The counter closed at 10.5 cents on Friday.

Leeden Ltd
There is strong price support in welding, gas and safety products and services provider Leeden Ltd this month with buybacks by the company and purchases by CEO Steven Tham Weng Cheong and executive director Lim How Boon.

The acquisitions totalling 1.3 million shares accounted for 84 per cent of the stock's trading volume. The group repurchased one million shares from March 2 to 20 at an average of 34.5 cents each.

The company previously acquired 70,000 shares on Feb 26 at 35.5 cents each and 3.4 million shares from February 2007 to December 2008 at 31 cents to 42 cents each.

On the directors' side, CEO Steven Tham purchased 250,000 shares on March 19 at 33 cents each, which increased his holdings (direct and deemed) to 37.3 million shares or 21.7 per cent. He previously acquired 5.1 million shares from March 6 to Dec 3, 2008 at 37 cents to 49 cents each.

Executive director Lim How Boon, on the other hand, picked up 12,000 shares on March 13 at 34 cents each, which boosted his stake (direct and deemed) to 20.7 million shares or 11.9 per cent. He previously acquired 193,000 shares in March 2008 at 42 cents each.

The sentiment is not entirely positive this month as substantial shareholder Ong Nai Pew sold 733,000 shares from March 2 to 19 at an estimated price of 35 cents each, which reduced his holdings (direct and deemed) to 12.5 million shares or 7.3 per cent. He previously acquired 93,000 shares on Jan 7 at 39 cents each. The stock closed at 35 cents on Friday.

Wanxiang International
Natural and synthetic flavours and fragrances producer Wanxiang International bought back shares for the first time since listing in 2007 with 800,000 shares purchased from March 16 to 17 at 5 cents each.

The trades were made on the back of the 60 per cent decline in the share price since June 2008 from 12.5 cents.

Investors should note that the initial buybacks were made at sharply lower than the IPO price of 29 cents.

The company announced on Feb 28 a fourth quarter profit of 734,000 yuan for the three months to Dec 31, 2008 versus a loss of 677,000 yuan in the same period last year. Earnings for the full-year, however, fell by 74 per cent to 7.569 million yuan. The counter closed at 4.5 cents on Friday.

The writer is managing director, Asia Insider Limited \
Source: Business Times Singapore