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INSIDE INSIGHTS

Share buybacks, directors' trades soar as earnings season wraps up

FOR the year thus far, the Straits Times Index (STI) has continued to be the strongest of the regional majors that include the Nikkei 225, Hang Seng and S&P/ASX 200. In the 2018 year through to May 17, the STI generated a 5.5 per cent total return, compared to these three regional indices averaging a 2.3 per cent return, while the Dow Jones has gained 1.3 per cent, in SGD terms.

For the five trading sessions ended May 17, the STI's total return was 0.3 per cent, with three benchmarks of the region averaging a marginally firmer 0.7 per cent total return.

Share buybacks

The five sessions saw share buyback consideration continue to build momentum, with 11 stocks conducting buybacks, totalling S$27.5 million. This was up from S$19.6 million over the preceding five sessions. Stocks that commenced buybacks under new mandates included Singapore Technologies Engineering, Best World International (BWI) and Bonvests Holdings.

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Director and substantial shareholder transactions

The five sessions saw 62 primary-listed stocks lodge 130 changes in director interests or substantial shareholders. The number of stocks lodging transactions was up from 42 stocks in the preceding five sessions. There were 33 director acquisitions and five disposals filed, while substantial shareholders filed seven acquisitions 10 disposals.

On May 15 and 17, Yanlord Land Group chairman and CEO Zhong Sheng Jian acquired 9,111,300 shares of the company for a consideration of S$15.7 million. This took the deemed interest of Mr Zhong in Yanlord Land Group from 68.78 per cent to 69.25 per cent. On May 10, Yanlord Perennial Investment (Singapore) Pte Ltd (YPIL) acquired 685,600 shares of United Engineers (UEL) for a consideration of S$1,864,373. This took the deemed UEL interest of Mr Zhong, who also serves as UEL's executive chairman to 33.86 per cent.

On May 11 UOL Equity Investments Pte Ltd acquired 60,300 shares of United Industrial Corporation (UIC) for a consideration of S$196,143, at an average price of S$3.25279 per share. This took the total stake in UIC held by its chairman, Wee Cho Yaw, to 49.8525 per cent.

Between May 16 and 17, BWl founding co-chairman Dora Hoan acquired 600,000 shares of the company for a consideration of S$766,993. This has taken Ms Hoan's total interest in BWI to 40.8542 per cent.

On May 15, NutriAsia Pacific Limited acquired 41,509,769 shares of Del Monte Pacific for a consideration of S$8.30 million, taking its direct stake in the stock from 59.41 per cent to 61.55 per cent. This saw Del Monte Pacific executive director Joselito D Campos, Jr's total stake in Del Monte Pacific rise from 69.56 per cent to 71.70 per cent. The NutriAsia Group of Companies is a major food conglomerate in the Philippines, where Mr Campos also serves as chairman and CEO.

Veteran banker Steven Ong Kay Eng also continued to increase his total stake in Hwa Hong Corporation. With a current total stake of 13.115 per cent, Mr Ong has gradually grown his stake in the company from 10.804 per cent on Nov 28, 2016, and 7.38 per cent at the end of 2014.

Vicplas International (Vicplas) non-executive director Robert Gaines-Cooper continued to increase his stake in the stock, taking his direct stake in Vicplas to 2.96 per cent. Mr Gaines-Cooper also maintains a deemed interest of 280,852,441 shares in Vicplas, through Venner Capital SA, which brings his total stake in Vicplas to 58.55 per cent.

Silverlake Axis

Last week, Silverlake Axis (SAL) which provides financial services technology to the banking, insurance, payments, retail and logistics industries, filed share buybacks in addition to director acquisitions. Between May 15 and 17, SAL bought back 8.84 million shares for a consideration of S$4.81 million

On May 15, CEO & group managing director Kwong Yong Sin increased his deemed interest in Silverlake to 0.687 per cent (18.322 million shares). The transaction involved the acquisition of 200,000 shares for a consideration of S$106,964. Independent non-executive director Ong Kian Min also acquired 200,000 shares for a consideration of S$106,000 taking his stake to 0.03 per cent.

The group recorded revenue growth of 2 per cent to RM126.7 million in its Q3FY18 (ended March 31). With the exception of maintenance and enhancement services, which delivered fewer large projects, all business activities contributed higher revenue during the quarter and gross profit rose 6 per cent to RM 71.5 million.

Due to increased contributions from higher margin software licensing and improved profit margin achieved by software project services as well as credit and cards processing, the group's gross profit margin rose to 56 per cent.

Dr Kwong noted with SAL's results that for the past year, the group has been actively engaging existing and potential customers for core IT replacements and digital banking upgrades and have responded to their requests for proposals.

He added that SAL's efforts had resulted in the strong growth achieved by project related revenue segments in Q3FY18 as well as two notable new core banking contracts secured last month.

AEM Holdings

AEM Holdings Ltd (AEM) appointed Loh Kin Wah as a non-executive and independent director with effect from May 4, 2018. Following his appointment, Mr Loh made multiple acquisitions of shares of the semiconductor equipment maker.

On May 10, he acquired 25,000 shares of AEM for a consideration of S$139,888, followed by another 25,000 shares of AEM on May 11 for a consideration of S$141,008. This has taken his stake in AEM to 0.074 per cent.

Mr Loh has extensive leadership experience in the semiconductor industry and has held senior positions in finance and asset management. Over the last 10 years, his appointments include the vice-chairman of Synesys Technologies Pte Ltd, Singapore, managing partner of Beijing Jianguang Asset Management Co China and executive vice-president, global sales and marketing of NXP Semiconductors, Netherlands. Currently, he is a member of the supervisory board of BESI BV, Netherlands, and of the supervisory board of AMS AG, Austria.

AEM aims to be among the world's leading companies providing solutions in equipment systems, precision components and related manufacturing services across various industries.

For its Q1FY18 (ended March 31) AEM reported an increase in net profit of 98.6 per cent year on year (yoy) to S$8.2 million on higher revenue and better margins. As reported in The Business Times on March 27, James Toh Ban Leng, co-founder of New Earth Group, is the single largest shareholder of AEM, with a stake of 7.74 per cent.

The other co-founder of New Earth Group, Loke Wai San, who also serves as AEM executive chairman, holds a 1.99 per cent stake in AEM. As noted by Mr Loke in the FY17 Annual Report, the preceding financial year was transformational for AEM, in that the multi-year development effort on its high density modular test handler platform gained wide acceptance with its key customer, and thus it was able to deliver record revenue of S$221.6 million and net profit of S$31.5 million.

  • The writer is the market strategist at Singapore Exchange (SGX). To read SGX's market research reports, visit sgx.com/research.