Dahua Founder Sells $122 Millon Dahua Stock

By John Honovich, Published May 15, 2017, 02:17pm EDT

Just a week after his sudden resignation as CEO, Dahua's Founder sold off ~$122 million of Dahua's stock.

Inside this note, we examine the stock sale, significant loans and risks to Dahua from these moves.

Stock ****

***** ***** ****** [**** no ****** *********] ***** that ** *** **, 2017, *****'* ******* ******** **** ~$*** ******* of ***** ******. ************, in *******, **'* **** sold *** ~$** ******* of ***** ******. **** equated ** ~*.*% ** Dahua's ***** ******.

Current ********

***** *** ****, ** and *** **** *** 42% ** *****'* ******, equivalent ** $*.* ******* USD. *** ***** ****** says **** ****** *********** shareholders **** **** ********* (at *********** *** **** percentage **** *** ******* government **** ********* *** is *********'* *********** ***********).

High ***** / ******* ******

*** ******* ******* ** that *****'* ******* *** pledged $*** ******* *** of ***** ****** (~**% of ****** *****) ** collateral *** ****. **** the **** **, ******** or ********, *** *** disclosed.******* ************** **** *** *********, e.g., ** ***** ** a ******* **** *** loan ** *** ****** of *** ****** ******* decreases, ***.

Selling ***** *********

*****'* ******* ******* *** week ***** ** ******* is, ** ****, **** timing *** ***** ****** a **** ** ********** in ***** ** ********* concerns. ******* ******* ** often * ***** ******** signal *** *********.

***** *** ***** *** given *** *********** ***** why *** ***** ****** said *****'* ******* ******** as *** *** '******** reasons' *** ***** ** claiming [**** ** ****** available] **** ** *** for '******* ****** ******'. Given ****, ** ***** not ****** *** ******** on *** ***** **** but ** ** ********* a ********* ** ******** to *****.

Comments (10)

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Armando Perez

IPVMU Certified | 05/15/17 02:52pm

uh-oh

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John Honovich

IPVM | In reply to Armando Perez | 05/15/17 02:58pm

Well, looking from it purely from Dahua's founder perspective, it's a lot better to be diversified and not locked into Dahua stock, which if or when it falls, could wipe him out.

It is tricky though, if he sells too much he could spark a panic which would hurt himself.

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Undisclosed #1

IPVMU Certified | In reply to John Honovich | 05/15/17 03:25pm

Downward price pressure due to dilutive effects could also come if the incoming President is granted shares, warrants or options, as part of his comp package, which is typical (in US companies at least.)

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John Honovich

IPVM | In reply to Undisclosed #1 | 05/15/17 06:02pm

Here is the recent Phase 3 Dahua employee stock plan. We have not gone through it and not sure if we will but for those interested, take a look. Anything interesting, let us know.

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Undisclosed #3

In reply to John Honovich | 05/16/17 03:12am

Personally i thought this file explain why Mr Fu sold the stock recently.

As this file mention the Max money for the empolyee stock plan would be 116Million USD.

And the money should come from the shareholder's Interest free loan.So Mr Fu need to sell 122Million USD stock to gather the money.

 

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John Honovich

IPVM | In reply to Undisclosed #3 | 05/16/17 12:17pm

shareholder's Interest free loan

#3, thanks. Where did you see this? I'd like to understand this better.

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Undisclosed #3

In reply to John Honovich | 05/17/17 12:29am
You can google translate the following words.
本计划（草案）获股东大会批准后，本员工持股计划设立时的资金总额
上限为 80,000 万元，以“份”作为认购单位，每份份额为 1 元，份额上限为 80,000
万元。员工持股计划持有人具体持有份额数以员工最后确认缴纳的份数为准，资金
来源为公司控股股东无息借款和法律、行政法规允许的其他方式。
 The total amount of funds for the establishment of the employee stock ownership plan after the approval of the shareholders' meeting of this plan (Draft)

An upper limit of 800 million yuan, with "share" as the subscription unit, each share of 1 yuan, the upper limit of 80000

Million yuan. ESOP holders have a specific share of the number of employees, the final confirmation of the amount paid, the funds

Sources are the controlling shareholder of the company, interest free loans and other methods permitted by laws and administrative regulations.

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Undisclosed Manufacturer #2

05/15/17 05:52pm

Quite few years ago there were two companies, Huawei and ZTE, fighting the similar war in telecom space as Hik vs DH here.  Starting the race running like neck to neck, shoulder to shoulder.   Fast forward to now,  Huawei ends up overtaken Ericsson but ZTE got lost along the way.  

Guess history is repeating itself, again.   

 

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Undisclosed Manufacturer #4

In reply to Undisclosed Manufacturer #2 | 05/16/17 03:34am

Different from Huawei and ZTE, Huawei is private company, ZTE is state owned company like HIK.  Dahua and HIK both publich anyhow. 

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Mick Brown

05/17/17 11:02am

Laughing all the way to the bank

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