Possible turnaround for Chong Kin Group Holdings Limited (HKG:1609) insiders, still down HK$40m after a HK$56m shopping spree

By
Simply Wall St
Published
November 11, 2021
SEHK:1609
Source: Shutterstock

Some of the losses seen by insiders who purchased HK$56m worth of Chong Kin Group Holdings Limited (HKG:1609) shares over the past year were recovered after the stock increased by 15% over the past week. However, the purchase is proving to be an expensive wager as insiders are yet to get ahead of their losses which currently stand at HK$40m since the time of purchase.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Chong Kin Group Holdings

Chong Kin Group Holdings Insider Transactions Over The Last Year

The CEO & Co-Chairman of the Board Chao Ma made the biggest insider purchase in the last 12 months. That single transaction was for HK$50m worth of shares at a price of HK$2.30 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.69). Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

Happily, we note that in the last year insiders paid HK$56m for 23.80m shares. But they sold 936.00k shares for HK$5.1m. Overall, Chong Kin Group Holdings insiders were net buyers during the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
SEHK:1609 Insider Trading Volume November 11th 2021

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Chong Kin Group Holdings insiders own about HK$454m worth of shares (which is 60% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Chong Kin Group Holdings Tell Us?

It doesn't really mean much that no insider has traded Chong Kin Group Holdings shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Judging from their transactions, and high insider ownership, Chong Kin Group Holdings insiders feel good about the company's future. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Our analysis shows 5 warning signs for Chong Kin Group Holdings (1 doesn't sit too well with us!) and we strongly recommend you look at these before investing.

Of course Chong Kin Group Holdings may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

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