Stock Analysis

Insiders rewarded with a CN¥1.8m addition on top of their CN¥14m purchase as Guangdong Kanghua Healthcare Co., Ltd. (HKG:3689) hits HK$679m

Source: Shutterstock

Guangdong Kanghua Healthcare Co., Ltd. (HKG:3689) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 12% resulting in a HK$74m addition to the company’s market value. Put another way, the original CN¥14m acquisition is now worth CN¥16m.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Guangdong Kanghua Healthcare

Guangdong Kanghua Healthcare Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when insider Zhaoming Chen bought HK$7.2m worth of shares at a price of HK$1.80 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of HK$2.03. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Zhaoming Chen purchased 7.71m shares over the year. The average price per share was HK$1.80. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

SEHK:3689 Insider Trading Volume March 15th 2023

Guangdong Kanghua Healthcare is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Does Guangdong Kanghua Healthcare Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. Guangdong Kanghua Healthcare insiders own about HK$493m worth of shares (which is 73% 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.

So What Do The Guangdong Kanghua Healthcare Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Guangdong Kanghua Healthcare shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. It would be great to see more insider buying, but overall it seems like Guangdong Kanghua Healthcare insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Guangdong Kanghua Healthcare. Case in point: We've spotted 4 warning signs for Guangdong Kanghua Healthcare you should be aware of, and 1 of these makes us a bit uncomfortable.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.

Valuation is complex, but we're helping make it simple.

Find out whether Guangdong Kanghua Healthcare is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis