BT: Buyers outweigh sellers by big margin (05 Mar 2007)

Buyers outweigh sellers by big margin

Notable trades last week involved Aztech, Haw Par, IFS Capital, Koda and CitySpring

By ROBERT HALILI

THE trading by directors and substantial shareholders was very high following the Chinese New Year break with 77 trades worth $64 million based on filings with the Singapore Exchange from Feb 26 to March 2. That was the second straight week of heavy trading by corporate shareholders as they were also busy during the holiday-shortened week of Feb 21 to 23 with 40 transactions worth $37 million.

Buyers outweighed sellers last week with 31 firms that posted 56 acquisitions worth $58 million versus nine companies with 21 disposals worth $6 million. The heavy buys and low sales was not surprising as directors and substantial shareholders reacted accordingly to the sharp correction in the market last week which saw the Straits Times Index plunge by 7 per cent to 3,078.74 points.

Listed firms also provided support with eight firms that recorded a high 24 repurchases worth $10.8 million last week. Among the buyers was Aztech Systems which bought back shares for the first time after the stock fell by 17 per cent.

Three other stocks that recorded significant acquisitions were Haw Par Corporation, IFS Capital and Koda Ltd. Lastly, there were conflicting trades in recently listed CitySpring Infrastructure Trust last week.

Aztech Systems

Aztech bought back shares for the first time since buybacks were introduced by the Singapore Exchange in June 1999 with 721,000 shares purchased on March 1 at 37.5 cents each. The initial buyback was made after the stock fell by 17 per cent from 45 cents on Feb 8. Despite the fall in the share price, the counter is still sharply up since January from 24 cents. Aside from the company, four directors bought shares on Feb 14 totaling 250,000 shares at 41.5 cents each.

Among the buyers were chairman Hong Yew Mun, vice-president Chia Heok Miin and executive director Mun Weng Hung. The acquisitions by those four directors were significant as those were the first insider purchases in the company since December 2004 when the share price was nine cents.

Three other directors also acquired 1.7 million shares last month via exercise of options at 9.9 cents to 11 cents each. The fact that those three directors refrained from taking quick profits at the stock's record high price of 41.5 cents sends very bullish signals for the stock.

The insider acquisitions and buybacks in the past month were made after the group announced its year-end results on Feb 8. Aztech posted a 97.8 per cent gain in net profit to $20.03 million for the 12 months to Dec 31, 2006. The counter closed at 37 cents on Friday.

Haw Par Corporation

Arnhold and S Bleichroeder recorded its first buy in healthcare and leisure products provider Haw Par since October 2004. The purchase was significant as it was made at sharply higher than its previous purchase prices. The acquisition was also made after Haw Par announced its annual results on Feb 22. The group picked up 2.2 million shares on Feb 27 at an estimated price of $7.65 each, which increased its deemed holdings by 10 per cent to 22.9 million shares or 11 per cent.

Arnhold and S Bleichroeder previously acquired 8.3 million shares from March to October 2004 at estimated prices of $4.66 to $4.94 each and 2.1 million shares in 4Q03 at $4.41 each.

Haw Par announced on Feb 22 a 29.6 per cent gain in net profit to $104.55 million for the 12 months to Dec 31, 2006. The counter closed lower from Arnhold and S Bleichroeder's last buy price to $7.15 on Friday.

IFS Capital

CEO Lee Soon Kie resumed buying shares of financial services firm IFS Capital at sharply higher than his on-market purchase prices from May 2004 to December 2005.

The acquisition was also made after the group announced its year-end results on Feb 22. Mr Lee bought 37,000 shares on Feb 28 at $1.06 each, which increased his direct holdings by 9 per cent to 430,000 shares.

He previously acquired in the open market 243,000 shares from May 2004 to December 2005 at 50 cents to 60 cents each. Mr Lee was appointed as chief executive in April 2004.

IFS Capital announced on Feb 22 a 2.1 per cent gain in net profit to $11.82 million for the 12 months to Dec 31, 2006. The stock closed at $1.07 on Friday.

Koda Ltd

Blackhorse Asset Management Pte Ltd acquired more shares of original design furniture manufacturer Koda at sharply higher than its initial filing price on Jan 31.

The group acquired 178,000 shares on Feb 9 at an estimated price of 86 cents each and 518,000 shares on Feb 26 and 27 at 87.5 cents to 92 cents each. The trades increased its deemed holdings by 5 per cent to 10.8 million shares or 9.7 per cent.

The acquisitions were made at what were then the stock's record high prices since the stock was listed on the mainboard in May 2005.

Blackhorse Asset Management previously acquired seven million shares on Jan 31 via the placement of shares at 73.5 cents each, which increased its interest by 225 per cent to 9.1 per cent.

That placement was made a day after Koda announced its interim results. The group posted an 89.7 per cent gain in net profit to US$4.08 million for the six months to Dec 31, 2006.

The acquisitions by Blackhorse this month were the first trades by a director or substantial shareholder of the company since August 2004 when director James Koh Jyh Gang acquired 100,000 shares at 30 cents each.

Koda's shares have been on an uptrend since January 2006 from 29.5 cents to 90.5 cents on Friday.

CitySpring Infrastructure

There were conflicting trades in Temasek Holdings' infrastructure business trust CitySpring Infrastructure Trust last month with net buys by UOB Asset Management, an initial filing by The Capital Group Companies, and a cessation of substantial shareholder interest by FMR Corp.

UOB Asset Management became a substantial shareholder on Feb 14 following the purchase of 150,000 units at $1.53 each, which raised its deemed interest to 5 per cent.

The group acquired a further 5.2 million units on Feb 27 at around the same price, which increased its stake to 6.2 per cent.

The fund manager, however, sold 2.2 million units on March 1 at an estimated price of $1.52 each, which lowered its stake by 8 per cent to 25.5 million units or 5.7 per cent. Overall, the group's stake is up by a net 2.97 million units or 13 per cent since that initial filing on Feb 14.

The Capital Group Companies, on the other hand, became a substantial shareholder on Feb 23 following the purchase of 3.6 million units at $1.50 each, which boosted its holdings by 18 per cent to 23.6 million units or 5.2 per cent.

On the negative side, FMR Corp ceased to be a substantial shareholder following the sale of 5.2 million units on Feb 12-13 and 561,000 units on Feb 22 at estimated prices of $1.48 to $1.58 each.

The trades reduced the company's deemed interest by 31 per cent to 22.1 million units or 4.9 per cent.

The group previously acquired an initial 31.9 million units or 7.1 per cent in the IPO at 89 cents each. The stock was trading slightly higher from the trading debut price of $1.48 on Feb 12 to $1.50 on Friday.

The writer is managing director, Asia Insider Limited

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