Can We See Significant Institutional Ownership On The The Hong Kong and China Gas Company Limited (HKG:3) Share Register?

If you want to know who really controls The Hong Kong and China Gas Company Limited (HKG:3), then you’ll have to look at the makeup of its share registry. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. We also tend to see lower insider ownership in companies that were previously publicly owned.

Hong Kong and China Gas has a market capitalization of HK$246b, so it’s too big to fly under the radar. We’d expect to see both institutions and retail investors owning a portion of the company. In the chart below, we can see that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about Hong Kong and China Gas.

See our latest analysis for Hong Kong and China Gas

SEHK:3 Ownership Summary, March 20th 2020
SEHK:3 Ownership Summary, March 20th 2020

What Does The Institutional Ownership Tell Us About Hong Kong and China Gas?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Hong Kong and China Gas does have institutional investors; and they hold 8.8% of the stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It’s therefore worth looking at Hong Kong and China Gas’s earnings history, below. Of course, the future is what really matters.

SEHK:3 Income Statement, March 20th 2020
SEHK:3 Income Statement, March 20th 2020

We note that hedge funds don’t have a meaningful investment in Hong Kong and China Gas. Henderson Development Limited is currently the company’s largest shareholder with 42% of shares outstanding. The second and third largest shareholders are BlackRock, Inc. and The Vanguard Group, Inc., holding 1.9% and 1.8%, respectively.

Our studies suggest that the top 25 shareholders collectively control less than 50% of the company’s shares, meaning that the company’s shares are widely disseminated and there is no dominant shareholder.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Hong Kong and China Gas

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our information suggests that The Hong Kong and China Gas Company Limited insiders own under 1% of the company. However, it’s possible that insiders might have an indirect interest through a more complex structure. As it is a large company, we’d only expect insiders to own a small percentage of it. But it’s worth noting that they own HK$736m worth of shares. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

With a 49% ownership, the general public have some degree of sway over 3. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

It seems that Private Companies own 42%, of the 3 stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Case in point: We’ve spotted 1 warning sign for Hong Kong and China Gas you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.

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