Huabang Technology Holdings Insiders Land Bargain With Gains Of HK$153m

Insiders who bought Huabang Technology Holdings Limited (HKG:3638) in the last 12 months may probably not pay attention to the stock's recent 10% drop. Reason being, despite the recent loss, insiders original purchase value of HK$100.8m is now worth HK$253.6m.

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.

View our latest analysis for Huabang Technology Holdings

The Last 12 Months Of Insider Transactions At Huabang Technology Holdings

The insider Lit Wan Cheung made the biggest insider purchase in the last 12 months. That single transaction was for HK$33m worth of shares at a price of HK$0.42 each. Even though the purchase was made at a significantly lower price than the recent price (HK$0.61), we still think insider buying is a positive. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

Over the last year, we can see that insiders have bought 415.78m shares worth HK$101m. But they sold 116.45m shares for HK$44m. In the last twelve months there was more buying than selling by Huabang Technology Holdings insiders. The average buy price was around HK$0.24. To my mind it is good that insiders have invested their own money in the company. But we must note that the investments were made at well below today's share price. 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!

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

Huabang Technology Holdings Insiders Bought Stock Recently

At Huabang Technology Holdings,over the last quarter, we have observed quite a lot more insider buying than insider selling. We can see that insider Lit Wan Cheung paid HK$44m for shares in the company. But insider Jian Luo sold shares worth HK$33m. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.

Insider Ownership Of Huabang Technology Holdings

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Huabang Technology Holdings insiders own 30% of the company, worth about HK$175m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Huabang Technology Holdings Insider Transactions Indicate?

It is good to see the recent insider purchase. And an analysis of the transactions over the last year also gives 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 Huabang Technology Holdings. Nice! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 4 warning signs for Huabang Technology Holdings (2 are potentially serious!) that we believe deserve your full attention.

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 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.