The Straits Times / The Business Times News on OSIM

Buyers stage a comeback, sellers make an impact

OSIM transaction boosts buy value to nearly double the past 12 weeks' average of $27.4 million

THE buying by directors and substantial shareholders rebounded sharply last week, with 23 firms that recorded 50 acquisitions worth $52 million based on filings on the Singapore Exchange in the first week of July. The figures were sharply up from the previous week's 21 companies, 38 trades, and $2.1 million.

Although the buying surged, the number of firms and acquisitions were down by an average of 15 per cent from the past 12 weeks' averages. The buy value, on the other hand, was nearly double the past 12 weeks' average of $27.4 million.

The huge buy value last week was due to an initial filing by global fund manager Franklin Resources in OSIM International worth $29 million. The initial purchase, which was made at $1.05 each, represented 5.07 per cent of the lifestyle products distributor and franchiser's issued capital.

Despite the sharp rebound in the buying, buyers took a back seat to sellers last week due to several significant sales ! by directors and institutional shareholders. The sales activity surged last week to eight firms that recorded 17 disposals worth $3.5 million, versus the previous week's three companies, three trades, and $1.4 million. The number of disposals last week was 37 per cent higher than the past 12 weeks' average of 12 trades. The increase in the selling last week was not surprising as the market has rebounded by more than 7 per cent since the second week of June to 2,445.13 last Friday.

Four stocks investors should watch out for based on last week's sales are Chuan Hup Holdings, Contel Corporation, Ezyhealth Asia Pacific, and SNP Corporation. The most significant disposal was in Contel Corporation due to a first-time sale by a substantial shareholder since the stock's listing in December last year. The disposal was also made on the back of the sharp drop in the share price since April. Investors should also trade with caution on Ezyhealth Asia Pacific as the group's CEO to! ok profits on all the shares that she acquired from 2001 to 2005, at 17 cents per share last week.

On the buying side, a director of recently listed Midsouth Holdings has been buying at progressively higher prices since June - from 41 cents to 58 cents per share last week.

Chuan Hup Holdings

Third Avenue Management LLC (TAM) have reduced their holdings in marine transport and services firm, Chuan Hup Holdings, by nearly 47 million shares or 43 per cent since March 13. The disposals were made at estimated prices of 37 cents to 33 cents each. TAM last sold 12.9 million shares last Wednesday at an estimated price of 33.5 cents each, which reduced their deemed stake by 17 per cent to 62.4 million shares or 5.7 per cent of the issued capital.

The group had previously sold 11.1 million shares on May 18 and 22.9 million shares from March 13 to 20. The sales by TAM were likely fetched at below their purchase prices last year, when they acquire! d an initial 109 million shares or 10 per cent at an estimated average price of 44 cents each.

In contrast with TAM's sales, managing director Peh Kwee Chim bought 11.5 million shares from May 8 to June 15 at an average of 33 cents each, which boosted his direct holdings to 219.8 million shares or 20.2 per cent. The director had previously acquired 5.6 million shares (deemed) from August to September 2005 at an average of 88.5 cents each (the stock was adjusted down to 38.5 cents on Nov 29, 2005, following the dividend payment of 44.4 cents per share). The stock closed at 34 cents on Friday.

Contel Corporation

There has been a first-time corporate shareholder trade in digital media products manufacturer and seller Contel Corporation since the stock's listing in December 2005. The trade was significant as it was made on the back of the 31 per cent drop in the share price since April from 40 cents. Promise Capital Group unloaded 5 million shares! last Tuesday at an estimated price of 27.5 cents each, which reduced their direct holdings by 24 per cent, to 15.9 million shares or 6.3 per cent.

Contel Corporation announced their year-end results in March with net profit up by 13.9 per cent to US$8.60 million for the 12 months to Dec 31, 2005. The stock closed above its trading debut price of 23.5 cents to 27 cents on Friday.

Ezyhealth Asia Pacific

CEO and managing director Sin Keng Choo took profits on the 16.1 million shares that she acquired of medical diagnostics services and managed healthcare services provider, Ezyhealth Asia Pacific, from 2001 to 2005 at an average of 5.8 cents each. Ms Sin unloaded 18.2 million shares from last Monday to Thursday at 16 cents to 18 cents each, or an average of 16.8 cents each. The trades reduced her direct holdings by 26 per cent to 50.6 million shares or 19.04 per cent. The disposals were hefty as they accounted for 49 per cent of the stock's tradi! ng volume.

The sales were made on the back of the sharp rise in the share price since January, from eight cents. The counter has risen this year despite the group announcing in March a net loss of $6.72 million for the 12 months to Dec 31, 2005, versus a net loss of $761,000 in the previous year. The heavy sales by the CEO suggest that the stock is fair-valued at the stock's closing price on Friday of 16 cents.

SNP Corporation

Seow Kui Lim unloaded more shares of printing firm SNP Corporation at below his sale price in February. The disposal also reduced his combined interest to below 5 per cent of the issued capital. Mr Seow disposed of 500,000 shares last Tuesday at an estimated price of 98 cents each, which reduced his deemed holdings by 8 per cent, to 5.5 million shares or 4.7 per cent of the issued capital. Mr Seow also has direct interest of 137,637 shares or 0.12 per cent. He previously sold 1.5 million shares on Feb 28 at an estimated ! price of $1.13 each. That sale in February was made after the stock rose by 20 per cent from 90 cents on Dec 21, 2005.

Two other directors sold shares earlier this year. John R Walter unloaded his entire holdings of 30,000 shares on May 23 at 91 cents each. The sale was made at a profit based on the initial 30,000 shares that he acquired on March 28 via options at 50 cents each. President & CEO Yeo Chee Tong also sold 125,000 shares on March 14 at $1.12 each, which lowered his direct stake by 44 per cent to 162,000 shares. He previously acquired 36,000 shares in February via allotment of shares and 100,000 shares in June last year via options at 65 cents each. The counter closed at 97 cents on Friday.

Midsouth Holdings

Director Lee Chong Min has been buying shares of recently listed fibreglass reinforced plastic vehicle parts designer and manufacturer, Midsouth Holdings, at progressively higher prices since June. The purchases totalling 1.45 m! illion shares were made at 41 cents to 58 cents each. The director started buying last month after the counter fell by 39 per cent from the trading debut price of 67 cents on May 5.

The director bought up 200,000 shares on June 8 at 41 cents each, and 500,000 shares on June 30 at 52 cents each. The director picked up a further 750,000 shares last Thursday at 57.8 cents each, which increased the insider's deemed interest to 57 million shares or 17.2 per cent.

The fact that the director acquired substantially more shares last week at the highest price indicates that the stock is still undervalued at 58 cents. Lee Chong Min is the only director or substantial shareholder of the company who has recorded a trade since the stock's listing. Despite the sharp rebound in the share price since June, the counter closed lower from its trading debut price to 60 cents on Friday.

The writer is managing director, Asia Insider Ltd