This Insider Has Just Sold Shares In SANVO Fine Chemicals Group - Simply Wall St News

Stock Analysis

We wouldn't blame SANVO Fine Chemicals Group Limited (HKG:301) shareholders if they were a little worried about the fact that Bingqiang Chen, the Chairman & CEO recently netted about HK$15m selling shares at an average price of HK$1.12. However, that sale only accounted for 4.0% of their holding, so arguably it doesn't say much about their conviction.

See our latest analysis for SANVO Fine Chemicals Group

In fact, the recent sale by Bingqiang Chen was the biggest sale of SANVO Fine Chemicals Group shares made by an insider individual in the last twelve months, according to our records. That means that an insider was selling shares at below the current price (HK$1.13). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 4.0% of Bingqiang Chen's stake.

Bingqiang Chen divested 15.67m shares over the last 12 months at an average price of CN¥1.12. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that SANVO Fine Chemicals Group insiders own 72% of the company, worth about HK$383m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

Unfortunately, there has been more insider selling of SANVO Fine Chemicals Group stock, than buying, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing SANVO Fine Chemicals Group. Case in point: We've spotted 5 warning signs for SANVO Fine Chemicals Group you should be aware of, and 1 of these doesn't sit too well with us.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.

An investment holding company, researches, develops, manufactures, and sells fine industrial chemical products in the People's Republic of China, Australia, and internationally.