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INSIDE MARKETS – Buy and sell transactions hit low levels; fund managers quiet

PURCHASES by directors and substantial shareholders was low for a second straight week with only 34 companies posting 72 ‘buys’, based on filings on the Singapore Exchange from Sept 17 to 21. The figures were consistent with the previous week’s 35 companies and 72 acquisitions. Investors should note that the buying has been low in each of the past two weeks, with the number of purchases sharply lower than the 124 acquisitions in the first week of September and 106 trades in the last week of August. Sales activity last week were also down with only 23 firms posting 52 disposals, sharply lower than the previous week’s 28 companies and 100 disposals.

Fund managers were quiet. Only six institutions each posted 16 purchases and 22 disposals, against the previous week’s eight asset managers with 30 acquisitions and nine institutions recording 43 disposals.

Several buyers made their maiden entry on the local market last week. The chief executive of Dutech Holdings made his first purchase after the group announced its second-quarter results, while the managing director of Soilbuild Group Holdings returned to the market after being absent since 2006. Legg Mason Inc raised its interest in Straits Asia Resources by 7 per cent to 5.1 per cent. On the sales side, there were bearish signals in Hongguo International Holdings and Aztech Systems as two fund managers lowered their respective stakes to below 5 per cent.

Dutech Holdings

Chairman and CEO Johnny Liu Jiayan recorded his first buys in recently-listed ATM manufacturer Dutech Holdings, after the stock fell below 40 cents per share. The purchases were also made after the group announced its Q2 results on Sept 12. The CEO acquired an initial 200,000 shares on Sept 13 at 39 cents each. He picked up a further 200,000 shares on Sept 17 after the stock fell to 35 cents, doubling his stake to 400,000 shares. Mr Liu is one of two directors who have bought the company’s shares since the stock was listed on Aug 2.

Independent director Graham Macdonald Bell acquired an initial 17,000 shares on Aug 7 at 37 cents each.

Dutech Holdings posted a 5.3 per cent gain in net profit to 12.64 million yuan (S$2.54 million) for the three months to June 30, 2007. Earnings in the first half rose by 14.9 per cent to 23.29 million yuan. After rising from the IPO price of 33 cents to 46 cents on the stock’s trading debut on Aug 2, the counter closed sharply lower at 32.5 cents on Friday.

Soilbuild Group Holdings

Managing director Lim Chap Huat recorded his first buys in boutique property developer and construction firm Soilbuild Group Holdings since July 2006, with 229,000 shares snapped up from Sept 17 to 20 at an average of $1.27 each. The trades, which accounted for 44 per cent of the stock’s trading volume, boosted his holdings (direct and deemed) to 116.3 million shares, or 58 per cent of the issued capital.

Mr Lim is one of three directors who have bought shares in the past two months. Chairman of Remuneration Committee Kelvin Tan Wee Peng bought 10,000 shares on Aug 15 and 16 at an average price of $1.22 each, boosting his direct stake to 150,000 shares. Executive director Low Soon Sim, on the other hand, picked up 10,000 shares on Aug 16 at $1.21 each, raising his direct interest to 570,000 shares.

Soilbuild Group announced its interim results on Aug 14 with a net profit of $28.69 million for the six months to June 30, 2007, against a loss of $2.34 million in the same period last year. The counter closed at $1.30 on Friday.

Straits Asia Resources

Legg Mason Inc became a substantial shareholder of resource development and mining firm Straits Asia Resources on Sept 14 following the purchase of three million shares at $1.36 each. The trade increased its deemed holdings by 7 per cent to 46.8 million shares or 5.1 per cent.

But Fidelity International Ltd reported a disposal-related filing on Sept 11 of 1.2 million shares at an estimated price of $1.33 each, which reduced its deemed stake to 54.5 million shares or 5.9 per cent. The group previously sold 3.7 million shares from Aug 2 to Sept 10 at estimated prices of $1.18 to $1.33 each.

Overall, the fund manager’s stake is down by nearly 5 million shares or 8 per cent since August. Prior to the disposals, the group acquired 13.3 million shares from July 19 to Aug 1 at estimated prices of $1.42 to $1.18 each. Fidelity reported an initial filing on July 18 of 1.8 million shares at 94 US cents each, which raised its interest to 5.01 per cent.

Investors should note that CEO Richard Ong Chui Chat acquired 400,000 shares from July 13 to 31 at $1.43 to $1.17 each, or an average of $1.30 each, which boosted his deemed holdings by 129 per cent to 710,000 shares. He previously acquired 100,000 shares on March 6 at 76 cents each.

Straits Asia Resources announced its Q2 results on Aug 14 with net profit down by 39 per cent to US $7.11 million for the three months to June 30, 2007. Earnings in H1 fell by 41.4 per cent to US$15.53 million. The counter closed at $1.44 on Friday.

Hongguo International Holdings

Consistent sales by FMR Corp in fashion shoes designer, manufacturer, and retailer Hongguo International Holdings since the last week of June totalling 21.2 million shares lowered its interest by 52 per cent to 4.9 per cent. The disposals were made from June 28 to Sept 14 at estimated prices of $1.30 to $0.86 each.

The group last sold 969,000 shares from Aug 15 to Sept 14 at estimated prices of 86 cents to 95 cents each, which reduced its deemed holdings to 19.3 million shares or 4.9 per cent. Prior to the disposals, FMR Corp acquired nearly 21 million shares from December 2006 to June 27 at estimated prices of $0.54 to $1.32 each. The group became a substantial shareholder (for the second time) on Dec 21, 2006, following the purchase of 1.2 million shares at 54 cents each, which raised its interest to 5.2 per cent.

The fund manager’s sentiment is not entirely negative as Schroder Investment Management Group became a substantial shareholder on Aug 7 following the purchase of 884,000 shares at 97 cents each. The purchase, which was made on behalf of clients by its Hong Kong branch acting as Investment Advisors, boosted its deemed holdings to 20.6 million shares or 5.2 per cent.

Investors should note that managing director Li Wei purchased 1.75 million shares in January at $1.16 each, which increased his deemed stake by 9 per cent to 21.5 million shares or 5.4 per cent. Mr Li also has direct holdings of 17.4 million shares or 4.4 per cent. He previously acquired 1.7 million shares from Nov 28 to 30, 2006 at an average of 71.4 cents each. The stock closed at 88.5 cents on Friday.

Aztech Systems

Credit Agricole Asset Management SA ceased to be a substantial shareholder of contract manufacturer Aztech Systems on Sept 19 following the sale of 2.1 million shares at an estimated price of 49.5 cents each. The trade reduced its deemed holdings by 10 per cent – to 19.3 million shares or 4.6 per cent. The sale price was far below the group’s initial filing price in July.

Credit Agricole previously reported an initial filing on July 6 of 1.04 million shares at 61 cents each, which raised its interest to 5.1 per cent. But board member Patricia Ng Sok Cheng and the company bought shares on Sept 20. Ms Ng acquired 100,000 shares at 42 cents each, which increased her direct stake by 72 per cent to 239,000 shares. She also has deemed interest of 15 million shares or 3.6 per cent.

She previously acquired 1.7 million shares from Feb 28 to June 18 via exercise of options at an average of 10.6 cents each and 50,000 shares on Feb 14 on the open market at 41.5 cents each.

Prior to her trades this year, Ms Ng bought 50,000 shares in December 2004 at nine cents each. The company, on the other hand, bought back 500,000 shares on Sept 20 at 42.5 cents each. The group previously acquired 389,000 shares on Aug 17 at 48 cents each, 500,000 shares on Aug 2 at 60 cents each, and 1.2 million shares in March at 37 cents each. The trades since March were the company’s first buybacks since listing. The stock closed at 45 cents on Friday.

The writer is Managing Director, Asia Insider Limited

 

Source: Business Times 24 Sept 07

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