Stock Analysis

Private companies in Lifan Technology(Group)Co.,Ltd. (SHSE:601777) are its biggest bettors, and their bets paid off as stock gained 12% last week

SHSE:601777
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Key Insights

  • The considerable ownership by private companies in Lifan Technology(Group)Co.Ltd indicates that they collectively have a greater say in management and business strategy
  • 63% of the business is held by the top 3 shareholders
  • Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

If you want to know who really controls Lifan Technology(Group)Co.,Ltd. (SHSE:601777), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 33% to be precise, is private companies. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Clearly, private companies benefitted the most after the company's market cap rose by CN¥1.6b last week.

In the chart below, we zoom in on the different ownership groups of Lifan Technology(Group)Co.Ltd.

Check out our latest analysis for Lifan Technology(Group)Co.Ltd

ownership-breakdown
SHSE:601777 Ownership Breakdown February 28th 2024

What Does The Institutional Ownership Tell Us About Lifan Technology(Group)Co.Ltd?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that Lifan Technology(Group)Co.Ltd does have institutional investors; and they hold a good portion of the company's 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Lifan Technology(Group)Co.Ltd's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
SHSE:601777 Earnings and Revenue Growth February 28th 2024

Hedge funds don't have many shares in Lifan Technology(Group)Co.Ltd. Chongqing Liangjiang Equity Investment Fund Management Co., Ltd. is currently the company's largest shareholder with 30% of shares outstanding. Geely Maijie Investment Co., Ltd. is the second largest shareholder owning 20% of common stock, and Chongqing Lifan Holdings Ltd holds about 14% of the company stock.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 63% stake.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Lifan Technology(Group)Co.Ltd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 less than 1% of Lifan Technology(Group)Co.,Ltd.. But they may have an indirect interest through a corporate structure that we haven't picked up on. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own CN¥34m worth of shares. Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 30% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With an ownership of 30%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

Our data indicates that Private Companies hold 33%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Lifan Technology(Group)Co.Ltd you should know about.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.

Valuation is complex, but we're helping make it simple.

Find out whether Lifan Technology(Group)Co.Ltd is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.