Can We See Significant Insider Ownership On The Consun Pharmaceutical Group Limited (HKG:1681) Share Register?

The big shareholder groups in Consun Pharmaceutical Group Limited (HKG:1681) have power over the company. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. I quite like to see at least a little bit of insider ownership. As Charlie Munger said ‘Show me the incentive and I will show you the outcome.

Consun Pharmaceutical Group is a smaller company with a market capitalization of HK$3.4b, so it may still be flying under the radar of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions own shares in the company. Let’s take a closer look to see what the different types of shareholder can tell us about Consun Pharmaceutical Group.

Check out our latest analysis for Consun Pharmaceutical Group

SEHK:1681 Ownership Summary, February 9th 2020
SEHK:1681 Ownership Summary, February 9th 2020

What Does The Institutional Ownership Tell Us About Consun Pharmaceutical Group?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it’s included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Consun Pharmaceutical Group already has institutions on the share registry. Indeed, they own 23% of the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Consun Pharmaceutical Group, (below). Of course, keep in mind that there are other factors to consider, too.

SEHK:1681 Income Statement, February 9th 2020
SEHK:1681 Income Statement, February 9th 2020

Hedge funds don’t have many shares in Consun Pharmaceutical Group. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Consun Pharmaceutical Group’s case, its Top Key Executive, Yubao An, is the largest shareholder, holding 25% of shares outstanding. Next, we have Qian Li and Wai Po Young as the second and third largest shareholders, holding 16% and 13%, of the shares outstanding, respectively. Interestingly, Qian Li is also a Chief Executive Officer, again, pointing towards strong insider ownership amongst the company’s top shareholders.

Additionally, we found that 3 of the top shareholders have a considerable amount of ownership in the company, via their 54% stake.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Consun Pharmaceutical Group

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own the majority of Consun Pharmaceutical Group Limited. This means they can collectively make decisions for the company. Given it has a market cap of HK$3.4b, that means they have HK$1.9b worth of shares. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

With a 23% ownership, the general public have some degree of sway over 1681. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we’ve discovered 1 warning sign for Consun Pharmaceutical Group that you should be aware of before investing here.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.