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INSIDE MARKETS – More sales deals than buys for the first time in 19 weeks

Bearish sentiment prevails with 17 firms recording 73 disposals last week

BUYING activity plunged while sales by directors and substantial shareholders remained constant last week based on filings to the Singapore Exchange from Oct 29 to Nov 2. The sentiment was bearish as sellers recorded more trades than buyers for the first time in the past 19 weeks, with 17 firms recording 73 disposals versus 29 companies with 71 acquisitions last week.

The sales figures were consistent with the previous week’s 21 companies and 75 disposals while the buy figures were sharply down from the previous week’s 42 firms and 122 purchases. There were also more sellers than buyers among institutional shareholders, with 10 fund managers posting 36 disposals against nine asset managers with 37 purchases last week.

The steep fall in the buying coupled with sellers posting more trades than buyers coincided with the 1.5 per cent drop in benchmark Straits Times Index last week to 3,715.32 points.

There were several significant sales by directors and substantial shareholders last week. Four stocks investors must watch out for are Asia Dekor Holdings, Banyan Tree Holdings, Hengxin Technology and Keppel Land. On the buying side, a top board member provided price support in underperforming stock OSIM International. The trade was significant as it was his first trade since his appointment in 2005.

Asia Dekor

Value Partners Limited (VPL) recorded its first sales in mainland laminated floor producer and distributor Asia Dekor since it became a substantial shareholder (for the second time) in June. The group sold 1.8 million shares on Oct 16 at an estimated price of 22 cents each and a further 8.9 million shares on Oct 29 at an estimated price of 19 cents each. The sales reduced its deemed holdings by 16 per cent to 55.5 million shares or 5.9 per cent of the issued capital.

VPL previously acquired 21.8 million shares from June 4 to Aug 8 at estimated prices of 17 cents to 22 cents each.

VPL reported an initial filing on June 4 of 500,000 shares at 17 cents each, which raised its interest to 5 per cent.

That initial filing was made after the share price rose by 31 per cent from 13 cents in April.

Prior to that purchase, the fund manager ceased to be a substantial shareholder on Jan 15 following the sale of 9.3 million shares at an estimated price of 15.5 cents each, which lowered its stake to 4.9 per cent. The counter closed at 18 cents on Friday.

Banyan Tree

The Capital Group Companies unloaded more shares of premium resorts, hotels and spas manager and developer Banyan Tree Holdings at lower than its previous sale prices.

The group sold 6.1 million shares from July 27 to Oct 30, which reduced its deemed holdings by 7 per cent to 76.1 million shares or 10 per cent. The stock during that period traded in the range of $2.49 to $1.69 each.

The group previously sold 25 million shares from May 29 to July 26 at estimated prices of $2.87 to $2.41 each.

Overall, Capital has sold more than 31 million shares since the last week of May, a reduction in its holdings of 29 per cent.

Prior to the disposals, the group acquired a net 30.5 million shares in the open market from June 22, 2006, to Feb 9 this year at estimated prices of $0.83 to $1.70 each.

The sales by Capital since May reduced its stake to its former level during the IPO. Capital acquired an initial 76.7 million shares or 10.2 per cent in the IPO in June last year at 82.8 cents each.

Banyan Tree announced its Q2 results on Aug 14 with a net profit of $3.2 million for the three months to June 30 versus a loss of $2.7 million in the same quarter last year. The stock closed at $2.10 on Friday.

Hengxin Technology

Sales by Siskin Investments in communications and technological products manufacturer and seller Hengxin Technology since the third week of May totalling 55 million shares reduced its direct holdings by 80 per cent to 13.7 million shares or 4.1 per cent.

The disposals were made from May 22 to Oct 24 at progressively lower prices from 42 cents to 26 cents each. The trades were hefty as they accounted for 32 per cent of the stock’s trading volume.

The bulk of those sales were made last week with 30 million shares sold from Oct 22 to 24 at an estimated average price of 28 cents each, which reduced its stake by 69 per cent.

Hengxin Technology announced its Q2 results in August with profit after tax down by 5.4 per cent to 27.38 million renminbi for the three months to June 30. Earnings in the first half fell by 10.6 per cent to 39.07 million renminbi.

The counter closed at 29 cents on Friday.

Keppel Land

Managing director Kevin Wong King Cheung recorded a rare sale in property developer Keppel Land with 150,000 shares sold on Nov 1 at $8.45 each. The trade reduced his direct holdings by 12 per cent to 1.09 million shares.

The disposal was made on the back of the 10 per cent rebound in the share price since September from $7.70. The sale was significant as that was Mr Wong’s first on-market trade since October 1994 when he sold his entire holdings of 20,000 shares at $2.49 each. (He was executive director prior to 2000.)

The sale this month was made at a huge profit based on the 983,000 shares that he acquired via exercise of options from January to April 2006 at an average of $1.67 each. Although the recent disposal by Mr Wong may have been made for personal reasons, the timing of the trade with the bourse trading at historical highs is a negative signal for the broader market. The shares of Keppel Land closed at $8.30 on Friday.

OSIM International

CFO Peter Lee Hwai Kiat recorded his first buy in healthy lifestyle products distributor and franchiser OSIM International since his appointment to the board in 2005 with 208,000 shares purchased on Oct 31 at 59 cents each.

The trade increased his direct holdings by 289 per cent to 280,000 shares.

The rare acquisition was made on the back of the 71 per cent decline in the share price since October 2006 from $2.06.

The purchase was also made after the group announced its Q3 results on Oct 24. OSIM posted a loss of $6.71 million for the three months to Sept 30 versus a loss of $9.42 million in the same period last year. For the first nine months, the group posted a loss of $26.91 million versus a profit of $5.38 million in the same period last year.

Founder, chairman and CEO Ron Sim bought shares prior to the results with two million shares purchased from May 8 to Sept 20 at 74 cents to 59 cents each, which increased his stake (direct and deemed) to 285.6 million shares or 52.7 per cent. He previously acquired 700,000 shares in November 2006 at $1.65 each. The counter closed at 64 cents on Friday.

The writer is managing director, Asia Insider Limited


Source: Business Times 5 Nov 07

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