Business Times - 01 Jun 2009

INSIDE MARKETS
Heavy disposals after stocks run up big gains

By ROBERT HALILI

TRADING by directors rose last week with 20 companies that recorded 31 purchases worth $4.1 million versus six firms with 14 disposals worth $31.7 million. The number of companies and trades on the buying side was higher than the previous week's 14 firms and 23 trades. On the negative side, the sales last week were sharply higher than the previous week's six disposals worth $3.8 million.


Most of the significant trades by directors were disposals. The heavy sales were not surprising due to the sharp gains in share prices. Three stocks that recorded heavy insider sales following the strong run-up in their share prices are Achieva Limited, Jardine Matheson Holdings and Swissco International.

Institutional shareholders also took advantage of the sharp gains in the market, with disposals by KBC Asset Management in Darco Water Technologies and by Commonwealth Bank of Australia in Ezion Holdings. One particularly bearish shareholder was China Growth Opportunities Limited, with disposals recorded in Asia Water Technology and United Envirotech.

Achieva

Vice-president of business development Soh Eng Kuang and substantial shareholders Pok Tam Soon and Ng Chee Seng unloaded shares of electronic and information technology-related products distributor Achieva Limited totalling 29.2 million shares at 11 cents to 13 cents each. The disposals were made on the back of the sharp rise in the share price since April from 4.5 cents. The most bearish was Mr Soh as he sold his entire holdings (direct) of 19.2 million shares on May 19 and 20 at 12 cents each. He previously acquired 1.3 million shares on Dec 11, 2008, at 11 cents each. Mr Pok, on the other hand, ceased to be a substantial shareholder following the sale of eight million shares from May 15 to May 19 at an estimated price of 11 cents each, which lowered his direct stake by 24 per cent to 25.96 million shares or 4.9 per cent. He previously acquired 2.3 million shares in March 2008 via a sale and purchase agreement and exercise of options at an average of 13.8 cents each. And Mr Ng ceased to be a substantial shareholder following the sale of two million shares on May 21 at an estimated price of 12 cents each, which lowered his direct holdings by 7 per cent to 25.1 million shares or 4.8 per cent. He previously acquired 2.4 million shares in March 2008 via exercise of options at nine cents each. The counter closed at 12.5 cents on Friday.

Jardine Matheson

Executive director Benjamin Keswick recorded his first on-market trade in conglomerate Jardine Matheson Holdings since he joined the board in 2007 with 100,000 shares sold on May 21 at US$23.45 each. (His present and previous holdings were not provided in the filing.) The disposal was made on the back of the 47 per cent rise in the share price since March from US$16.00. The sale by Mr Keswick was the first trade by a director of the company since June 2008 when fellow executive director Adam Keswick sold 116,000 shares at US$29.47 each. That sale by Adam Keswick was options-related as he acquired 160,000 shares on the same day via exercise of options at an average of US$10.19 each. The stock closed at US$25.60 on Friday.

Swissco International



Chairman Yeo Chong Lin of marine logistics services, ship repair and maintenance services provider Swissco International took profits on the 1.93 million shares that he acquired from October 2008 to March at an average of 32.7 cents each. The chairman sold 1.86 million shares from May 25 to May 28 at an average of 66 cents each, which reduced his direct holdings by 75 per cent to 614,000 shares or 0.3 per cent of the issued capital. He also has deemed interest of 107.9 million shares or 57.8 per cent. Director sentiment is not entirely negative this year as CEO Alex Yeo Kian Teong purchased 100,000 shares on March 11 at 30 cents each, which boosted his direct stake to 1.9 million shares or 0.97 per cent. He previously acquired 405,000 shares from August to October 2008 at 77 cents to 32 cents each. The stock closed at 65.5 cents on Friday.

Darco Water Technologies

KBC Asset Management ceased to be a substantial shareholder of engineered water systems and water management services provider Darco Water following the sale of 23.2 million shares from May 12 to May 19 at estimated prices of six cents to eight cents each. The trades reduced its deemed holdings by 75 per cent to 7.9 million shares or 2.9 per cent. The disposals were made on the back of the rebound in the share price since the first half of March from 3.5 cents. Despite the sharp gain in the share price, the sales by KBC Asset Management were made at sharply lower than its purchase prices based on the net 17.9 million shares that the group acquired from June 2007 to September 2008 at estimated prices of 36 cents to 13 cents each. KBC Asset Management became a substantial shareholder in June 2007 following the purchase of 2.6 million shares at 36 cents each, which raised its interest to 7.1 per cent. The counter closed at 6.5 cents on Friday.

Ezion

Commonwealth Bank of Australia (CBA) recorded its first sale in mechanical and electrical engineering services provider Ezion Holdings since it became a substantial shareholder in October 2008 with 7.4 million shares sold on May 12 at an estimated price of 45 cents each. The trade reduced its deemed holdings by 19 per cent to 31.9 million shares or 4.97 per cent. The sale was made at a huge profit based on the 6.4 million shares that the group acquired on Oct 28, 2008, at an estimated price of 10 cents each. CBA reported an initial filing on Oct 14, 2008, of 907,000 shares at 16 cents each, which raised its interest to 5.1 per cent. The stock has risen sharply since March from 12.5 cents to 58 cents on Friday.

Asia Water Technology

China Growth Opportunities Limited recorded its first sales in water purification treatment systems provider Asia Water Technology since it became a substantial shareholder in September 2006 with 14.5 million shares sold from May 22 to May 28 at estimated prices of nine cents to seven cents each. The trades, which accounted for 65 per cent of the stock's trading volume, reduced its direct holdings by 36 per cent to 26.2 million shares or 13.3 per cent. The disposals were made at sharply lower than its purchase price based on the initial 40.6 million shares or 22.1 per cent that the shareholder acquired in September 2006 at 67 cents each. (That initial filing was by World Water Private, a wholly-owned subsidiary of China Growth Opportunities Limited; WWP transferred its holdings to CGO in June 2007.) The sentiment is not entirely negative as EGN Nominees Pte Ltd acquired an initial 12.6 million shares or 6.4 per cent on May 26 at eight cents each. The stock closed at eight cents on Friday.

United Envirotech

China Growth Opportunities unloaded shares of environmental engineering and consultancy services provider United Envirotech at sharply lower than its subscription price in February 2007 with 14.2 million shares sold from May 15 to May 28 at an estimated price of 10.5 cents each. The trades, which accounted for 89 per cent of the stock's trading volume, reduced its direct holdings by 29 per cent to 35.4 million shares or 8.9 per cent. The group previously acquired an initial 49.7 million shares (via World Water Private prior to transfer of shares to CGO in April 2009) or 12.5 per cent in February 2007 via placement of new shares at 26.7 cents each. The counter closed at nine cents on Friday.

The writer is managing director, Asia Insider Limited

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