It
is common belief that when key appointment holders or majority
shareholders start to accumulate shares of their own companies, it is
usually a strong indication that the company is doing well and its share
price is likely to follow suit. Naturally, who else could be more
familiar with the performance of the companies other than the people who
are actually running the show themselves?
There may be plenty of
reasons for one to sell his shares but when he does buy shares, it
could only be for one particular reason. And that is – to make money.
That said, let us look at three stocks which recently experienced
significant insiders buying.
Yangzijiang Shipbuilding
Yangzijiang Shipbuilding (Holdings) (YZJ) announced
on 31 August 2017 a share placement of 137 million new shares at $1.53
per share to raise net proceeds of around $209 million. Upon the
announcement, share price plunged by more than 13.8 percent from the
close on 30 August 2017 at $1.625 to $1.40 as of 27 September 2017.
The
group intends to use up to half of the net proceeds to fund new
investments and business expansion through acquisitions, and the
remaining for working capital and general corporate purposes including
the repayment of bank loans and debts.
As YZJ’s finance strength
was robust with a net cash of Rmb1.1 billion before the placement,
doubts were raised with regard to the need to raise funds, and there
were speculations that the group was preparing for major mergers and
acquisitions activities. Other possible explanations include enhancing
liquidity due to tightened capital controls arising from certain
high-profile incidents in China.
Yangzi International Holdings
lent out 137 million shares to facilitate in the share placement, which
is beneficially owned by the YZJ Settlement in which Ren Yuanlin,
chairman of YZJ, is deemed interested in. Pursuant to the full
settlement of the loan of the shares, Ren’s deemed interest in YZJ has
enlarged from 22.7 percent to 25.4 percent as of 25 September 2017.
Health Management International
Health Management International (HMI)
owns and operates two tertiary hospitals in Malaysia – namely Regency
Specialist Hospital (Regency) in Johor as well as Mahkota Medical Centre
(Mahkota) in Malacca.
Mahkota, one of the most comprehensive
cancer centre South of Kuala Lumpur, has plans to increase its capacity
by adding 34 beds to its existing 266 beds making it to 300 beds in
FY18. In addition, the medical centre stands to benefit from more flight
routes for the Malacca airport in October 2017, which currently only
offers flights to Pekanbaru and Penang.
Meanwhile, following a
successful turn-around in 2014, HMI has confirmed its plans to double
Regency’s bed capacity from the current 218-beds to an eventual 500-beds
hospital. Construction of the new extension block is expected to
commence in FY18 and slated for completion by FY21 at an estimated cost
of RM160 million.
Both hospitals continue to register healthy
patient growth as patients volume grew 3.7 percent year-on-year in 4Q17
and the growth of foreign patients has outpaced local patients. With the
acquisition of 100 percent stake in the two hospitals completed in
March 2017, higher earnings contribution due to the full ownership
structure can be expected.
Dr Gan See Khem, Executive Chairman of
HMI, has accumulated about 829,000 HMI shares through Nam See
Investment over the last two week between the range from $0.635 to
$0.655. As at 22 September 2017, Dr Gan’s deemed interest in HMI has
grown eight basis points to 39.8 percent.
According to a research
report by Maybank Kim Eng on 25 August 2017, the brokerage house
maintained a BUY rating on HMI with a price target of $0.80.
Mapletree Logistics Trust
Mapletree Logistics Trust (MLT) recently
entered into an agreement to acquire Mapletree Logistics Hub Tsing Yi
in Hong Kong from its sponsor, Mapletree Investments, at a consideration
of HK$4.8 billion.
The acquired building is an 11-storey ramp-up
warehouse with a net lettable area of 148.1k square meter. The property
has remaining leasehold of 46 years, located in a strategic location to
the city centre, and will be 100 percent occupied by October 2017. The
agreed acquisition price is attractive as it translated into a net
property income (NPI) yield of 5.7 per annum and is about 2.4 percent
below valuation.
The acquisition is estimated to lift MLT’s asset
under management and NPI by 15 percent and 14 percent respectively. In
addition, it is also expected to be distribution per unit accretive,
although aggregate leverage will edge up marginally to 38 percent.
As
a result of a purchase of 600,000 units by DBS Group Holdings via a
market transaction, major shareholder Temasek Holdings (Temasek) deemed
interests in MLT have inched up to 40 percent as at 14 September 2017.
Temasek’s deemed interests in MLT arise from the aggregation of
interests held by DBS Group Holdings and Mapletree Investments.
A
research report by Maybank Kim Eng released on 29 August 2017 revealed
that the broker maintained a HOLD rating on MLT, giving it a target
price of $1.20.
Source - Sharesinv.com
