China Information Technology Development Insiders Enjoying HK$4.1m Appreciation On HK$8.06m Investment

China Information Technology Development Limited (HKG:8178) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 25% resulting in a HK$39m addition to the company’s market value. As a result, the stock they originally bought for HK$8.06m is now worth HK$12.1m.

Although we don’t think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for China Information Technology Development

The Last 12 Months Of Insider Transactions At China Information Technology Development

The insider Rong Zhang made the biggest insider purchase in the last 12 months. That single transaction was for HK$1.5m worth of shares at a price of HK$1.96 each. We do like to see buying, but this purchase was made at well below the current price of HK$3.16. Because it occurred at a lower valuation, it doesn’t tell us much about whether insiders might find today’s price attractive.

Rong Zhang bought 3.84m shares over the last 12 months at an average price of HK$2.10. 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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SEHK:8178 Insider Trading Volume October 12th 2023

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership Of China Information Technology Development

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. China Information Technology Development insiders own 49% of the company, currently worth about HK$95m 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 Does This Data Suggest About China Information Technology Development Insiders?

It’s certainly positive to see the recent insider purchase. And the longer term insider transactions also give us confidence. However, we note that the company didn’t make a profit over the last twelve months, which makes us 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. That’s what I like to see! 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. Every company has risks, and we’ve spotted 4 warning signs for China Information Technology Development (of which 1 can’t be ignored!) you should know about.

But note: China Information Technology Development may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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.

Valuation is complex, but we’re helping make it simple.

Find out whether China Information Technology Development is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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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