Insiders of Shin Hwa World Getting Good Value On Their HK$122.7m Investment

Shin Hwa World Limited (HKG:582) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 39%, resulting in a HK$75m rise in the company's market capitalisation, translating to a gain of 45% on their initial investment. Put another way, the original HK$122.7m acquisition is now worth HK$177.9m.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

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The Last 12 Months Of Insider Transactions At Shin Hwa World

Notably, that recent purchase by Yi-Hua Yu is the biggest insider purchase of Shin Hwa World shares that we've seen in the last year. Even though the purchase was made at a significantly lower price than the recent price (HK$0.14), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

While Shin Hwa World insiders bought shares during the last year, they didn't sell. 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!

View our latest analysis for Shin Hwa World

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Insiders At Shin Hwa World Have Bought Stock Recently

Over the last quarter, Shin Hwa World insiders have spent a meaningful amount on shares. Not only was there no selling that we can see, but they collectively bought HK$123m worth of shares. This is a positive in our book as it implies some confidence.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Shin Hwa World insiders own 107% of the company, currently worth about HK$282m 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 Do The Shin Hwa World Insider Transactions Indicate?

The recent insider purchases are heartening. And the longer term insider transactions also give us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Shin Hwa World. That's what I like to see! While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. At Simply Wall St, we found 3 warning signs for Shin Hwa World that deserve your attention before buying any shares.

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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.