Director buys can be a sign that those with the most insight into a company view its shares as undervalued. Here we take a look at an ASX travel share with multiple recent director buys.
What is insider buying?
Insider buying is the purchase of shares in a company by an officer or executive of that company, such as a director. Insiders usually have exclusive insights into the companies they manage and are likely to purchase shares when they view them as undervalued.
Insiders must only buy based on publicly available information and must inform the ASX of the trade by lodging an Appendix 3Y. Depending on the circumstances, the purchase by an insider of shares can be seen as a vote of confidence in a business. Buys by multiple insiders can act as a stronger signal, as can larger, rather than smaller, share purchases.
Which ASX share had director buys?
We have studied recent insider buys to bring you an ASX travel share with multiple insider buys this week: Apollo Tourism & Leisure Ltd (ASX: ATL).
Three Apollo Tourism directors acquired an aggregate of 1,478,228 shares in the company last week. Apollo Tourism manufactures, rents, sells, and distributes a range of recreational vehicles including motorhomes, campervans, and caravans. The company operates in Australia, New Zealand, the USA, Canada, UK, Ireland, and Germany.
The Apollo Tourism share price has fallen from a high of 47 cents in January this year and is currently trading at 27 cents at the time of writing. Zooming out further, Apollo Tourism shares have a 52-week high of $1.02 which was achieved in April last year.
The company has recently been a victim of the bushfire crisis with domestic last minute bookings over the peak summer holiday period impacted. Apollo Tourism warned in January that the reduction in bookings combined with subdued global RV sales markets would make it challenging for the company to reach FY19 profit of $14.7 million in FY20.
Recent 1H20 results
In first-half results released last week, Apollo Tourism announced revenue for the half of $197.2 million, up 7.4% on 1H19. Guest rental days increased 7% to 536,562, while RV sales in Australia increased 11.3% to $80.5 million. Underlying net profit after tax (NPAT) was $12 million while statutory NPAT was $11.3 million.
CEO Luke Trouchet said, “the first half underlying result for FY20 of $12 million was a solid result in a soft market which shows that Apollo is heading in the right direction after a transitional FY19. Record revenue was achieved despite global events impacting the RV industry.”
Apollo advised that forward-looking bookings for FY21 remain strong at this stage. The bushfires in Australia and coronavirus have, however, impacted the 2H20 outlook.
While a single director buy may not be telling, several can provide a good indication that those best placed to know consider shares good value.