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Trade Alert: Rong Zhang At China Information Technology Development Limited (HKG:8178), Has Just Spent HK$9.3m Buying 136% More Shares

Simply Wall St ·  04/18 08:16

China Information Technology Development Limited (HKG:8178) shareholders (or potential shareholders) will be happy to see that insider Rong Zhang recently bought a whopping HK$9.3m worth of stock, at a price of HK$0.15. That purchase boosted their holding by 136%, which makes us wonder if the move was inspired by quietly confident deeply-felt optimism.

Check out our latest analysis for China Information Technology Development

China Information Technology Development Insider Transactions Over The Last Year

The insider Yat Lung Lee made the biggest insider purchase in the last 12 months. That single transaction was for HK$10m worth of shares at a price of HK$0.50 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.16). Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

In the last twelve months China Information Technology Development insiders were buying shares, but not selling. The average buy price was around HK$0.23. I'd consider this a positive as it suggests insiders see value at around the current price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

SEHK:8178 Insider Trading Volume April 18th 2022

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Does China Information Technology Development Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. China Information Technology Development insiders own 45% of the company, currently worth about HK$37m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The China Information Technology Development Insider Transactions Indicate?

It is good to see recent purchasing. And the longer term insider transactions also give us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest China Information Technology Development insiders are well aligned, and quite possibly think the share price is too low. One for the watchlist, at least! So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. When we did our research, we found 3 warning signs for China Information Technology Development (1 is concerning!) that we believe deserve your full attention.

Of course China Information Technology Development may not be the best stock to buy. So you may wish to see this free collection of high quality 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, but not derivative transactions.

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.

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