Insiders the biggest winners as Zhejiang Xiantong Rubber&Plastic Co.,Ltd's (SHSE:603239) market cap rises to CN¥4.7b

Key Insights

• Zhejiang Xiantong Rubber&PlasticLtd's significant insider ownership suggests inherent interests in company's expansion
• 56% of the business is held by the top 2 shareholders
• Institutions own 10% of Zhejiang Xiantong Rubber&PlasticLtd

To get a sense of who is truly in control of Zhejiang Xiantong Rubber&Plastic Co.,Ltd (SHSE:603239), it is important to understand the ownership structure of the business. With 37% stake, individual insiders possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, insiders were the biggest beneficiaries of last week’s 9.6% gain.

In the chart below, we zoom in on the different ownership groups of Zhejiang Xiantong Rubber&PlasticLtd.

Check out our latest analysis for Zhejiang Xiantong Rubber&PlasticLtd

What Does The Institutional Ownership Tell Us About Zhejiang Xiantong Rubber&PlasticLtd?

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.

Zhejiang Xiantong Rubber&PlasticLtd already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Zhejiang Xiantong Rubber&PlasticLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Zhejiang Xiantong Rubber&PlasticLtd. Taizhou Wucheng Industrial Development Co., Ltd. is currently the company's largest shareholder with 29% of shares outstanding. With 27% and 7.1% of the shares outstanding respectively, Qi Fu Li and Gui Yin Jin are the second and third largest shareholders. Gui Yin Jin, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Zhejiang Xiantong Rubber&PlasticLtd

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.

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 insiders maintain a significant holding in Zhejiang Xiantong Rubber&Plastic Co.,Ltd. It has a market capitalization of just CN¥4.7b, and insiders have CN¥1.7b worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

With a 23% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Zhejiang Xiantong Rubber&PlasticLtd. 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

We can see that Private Companies own 29%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Zhejiang Xiantong Rubber&PlasticLtd better, we need to consider many other factors. For instance, we've identified 1 warning sign for Zhejiang Xiantong Rubber&PlasticLtd that you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.

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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.