PACKAGES LTD (PKGS:PA)
12-month performance: +68%
Insider activity: Bullish
Insider buying pattern: Large purchases from key insider
Recent news: Hike in EPS
Being involved in key decision making, the executive committee has a greater insight to business activities and stock’s future potential. Knowledgeable in relation to the revenue trends and operational activities, the key insiders are ahead of hedge fund and portfolio managers and analysts when it comes to insight into future growth.
In this article, we are going to highlight recent insider buying at Packages Ltd (PKGS:PA). Headquartered in Lahore, Packages is a leading Pakistani multinational packaging company. The company offers a wide range of packaging products to nearly all sectors ranging from confectionery to the textile industry and supplies tissue products through different supply chains. The company is listed on Pakistan Stock Exchange and has a market capitalisation of PKR38 billion.
Insider buying: Purchases from member of Executive Committee
An insider purchase that stands out here is a large purchase from the member of the Executive Committee, Syeda Henna Babar Ali. As per 2iQ insider activity data, on 24th of August, Ms Ali had purchased 42,500 PKGS shares at an average share price of PKR410.
Source: 2iQ Research
Largest insider purchase in recent years
The insider activity at Packages that caught our attention is a series of purchases from Ms Ali. As per our records, insider has purchased shares worth PKR64 million in the month of August alone. In total, Syeda Henna Babar Ali purchased 157,000 PKGS shares.
This insider buying activity is worth taking note of for a few reasons.
Firstly, the trades executed by Syeda Henna are large in nominal and relative terms. The purchases in the month of August boasted her shareholdings by 24%. This suggests she is confident of the future of the company.
Secondly, Ms Ali maintains a good record in buying PKGS stock when the price is at dip. When she last purchased stock in May the stock was on its lowest for the month trading at PKR 303. Soon after this the stock climbed by 10% to PKR 339 in less than a week.
Solid Q2 results
Packages Ltd posted an excellent second quarter and first half results recently. The revenue rose by approximately 14% of in Q2 2020 as compared to Q2 2019, the EPS hiked by 13.18 — from -4.94 to 8.24. Moreover, the company reported a profit of PKR700 million in Q2 2020 as compared to a loss of PKR413 million in Q2 2020.
In addition, International Finance Corporation, the member of World Bank Group has signed a deal with Packages Limited for a five year loan investment of US$25 million which will allow the company to utilise water and energy resources more efficiently. The CEO, Syed Hyder Ali believes that the IFC program will allow Packages Limited to enhance production capacity. “This IFC program will not only contribute towards our core sustainability drive for resource conservation but will also upgrade our packaging capability to serve the growing needs of our clients in a more sustainable manner."
All things considered, we see this bulk purchase from key management as a bullish signal.