Insiders at Golden Century International Holdings Group Limited (HKG:91) sold HK$32m worth of stock, a potential red flag that needs to be monitored

By
Simply Wall St
Published
May 14, 2022
SEHK:91
Source: Shutterstock

While Golden Century International Holdings Group Limited (HKG:91) shareholders have enjoyed a good week with stock up 11%, they need remain vigilant. Although prices were relatively low, insiders chose to sell HK$32m worth of stock in the past 12 months. This could be a sign of impending weakness.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Golden Century International Holdings Group

Golden Century International Holdings Group Insider Transactions Over The Last Year

The Executive Chairman & CEO, Jibiao Pan, made the biggest insider sale in the last 12 months. That single transaction was for HK$32m worth of shares at a price of HK$0.14 each. That means that even when the share price was below the current price of HK$0.22, an insider wanted to cash in some shares. 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 8.2% of Jibiao Pan's holding. The only individual insider seller over the last year was Jibiao Pan.

You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. 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:91 Insider Trading Volume May 14th 2022

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Insider Ownership of Golden Century International Holdings Group

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. Golden Century International Holdings Group insiders own 74% of the company, currently worth about HK$715m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Golden Century International Holdings Group Insiders?

It doesn't really mean much that no insider has traded Golden Century International Holdings Group shares in the last quarter. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of Golden Century International Holdings Group insider transactions don't fill us with confidence. While we like knowing 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. To help with this, we've discovered 2 warning signs (1 is potentially serious!) that you ought to be aware of before buying any shares in Golden Century International Holdings Group.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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, but not derivative transactions.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.