20180626-中国银河国际证券-Share_Buyback_Review_after_Market_Correction_3页_438kb_438kb

Summary of the Document

Core Content

This document is a research report from China Galaxy International Securities (Hong Kong) Co., Limited dated June 26, 2018, analyzing the share buyback activities of Hong Kong-listed companies during a recent market correction. The report highlights companies that have shown active share buyback behavior, suggesting management confidence in their operations. It also compares the performance of these companies with the Hang Seng Index during the same period.

Main Points

Market Context

• The Hang Seng Index dropped >8% since early June due to concerns about a trade war and tight liquidity in mainland China.
• Many stocks fell more than 8% during the month, prompting a review of companies with active share buyback programs.

Share Buyback Review

• The report focuses on the share buyback activities between June 11 and June 25.
• Companies with a three-month average daily turnover of more than US$1m are included in the analysis (Figure 1).
• Emperor Watch and Jewelry (0887.HK) is slightly below the turnover criterion but is still included due to its active buyback track record.

Buyback Activity and Ratings

• Lee & Man Paper (2314.HK) and Sinosoft (1297.HK) received a BUY rating.
• Lifestyle China (2136.HK) bought back 2.61% of its free float in the past two weeks, showing strong commitment to share repurchases.
• Emperor Watch and Jewelry (0887.HK) and Lifestyle China (2136.HK) are highlighted as potential investment opportunities for those with a positive outlook on Hong Kong retail sales recovery.

Historical Performance

• A similar share buyback screen was conducted in February.
• The performance of those stocks was positive, with a simple average return of 7.3% over the past few months (including dividends), significantly outperforming the Hang Seng Index's -4.7% drop.
• Only Fosun International (0656.HK) underperformed compared to the Hang Seng Index.

Key Information

• Buyback percentages:

  • Lee & Man Paper (2314.HK): 1.45%
  • Sinosoft (1297.HK): 0.41%
  • Lifestyle China (2136.HK): 2.61%
  • Emperor Watch and Jewelry (0887.HK): 0.92%

• Equity Ratings Explanation:

  • BUY: Expected share price increase of >20% in 12 months.
  • SELL: Expected share price decrease of >20% in 12 months.
  • HOLD: No clear catalyst for price movement; rating may change based on future signals.

• Disclaimer and Disclosure

  • The report is intended for institutional clients only.
  • China Galaxy International may have financial interests in the companies discussed.
  • The report does not constitute an offer or solicitation to buy or sell securities.
  • The analysts have no direct or indirect financial interests in the companies mentioned and have not traded in their securities within 30 days prior to the report's issue.

Analysts

• Wong Chi Man – Head of Research
• Mark Lau – Research Analyst

Contact Information

• Wong Chi Man: (852) 3698-6317 | cmwong@chinastock.com.hk
• Mark Lau: (852) 3698-6393 | marklau@chinastock.com.hk

Copyright

• No part of this material may be reproduced or redistributed without the prior written consent of China Galaxy International Securities (Hong Kong) Co., Limited.