Have Insiders Sold Shanghai Chicmax Cosmetic Shares Recently?

We wouldn't blame Shanghai Chicmax Cosmetic Co., Ltd. (HKG:2145) shareholders if they were a little worried about the fact that Yixiong Lyu, the Chairman & CEO recently netted about HK$461m selling shares at an average price of HK$85.38. However, that sale only accounted for 5.4% of their holding, so arguably it doesn't say much about their conviction.

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The Last 12 Months Of Insider Transactions At Shanghai Chicmax Cosmetic

Notably, that recent sale by Yixiong Lyu is the biggest insider sale of Shanghai Chicmax Cosmetic shares that we've seen in the last year. That means that an insider was selling shares at below the current price (HK$85.70). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 5.4% of Yixiong Lyu's holding.

Happily, we note that in the last year insiders paid HK$36m for 942.80k shares. But they sold 5.40m shares for HK$461m. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

View our latest analysis for Shanghai Chicmax Cosmetic

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Does Shanghai Chicmax Cosmetic Boast High Insider Ownership?

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Shanghai Chicmax Cosmetic insiders own 41% of the company, currently worth about HK$14b based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About Shanghai Chicmax Cosmetic Insiders?

The stark truth for Shanghai Chicmax Cosmetic is that there has been more insider selling than insider buying in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But it is good to see that Shanghai Chicmax Cosmetic is growing earnings. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we've found that Shanghai Chicmax Cosmetic has 2 warning signs (1 is concerning!) that deserve your attention before going any further with your analysis.

But note: Shanghai Chicmax Cosmetic may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.