Ningbo KBE Electrical Technology Co.,Ltd.'s (SZSE:300863) last week's 11% decline must have disappointed private companies who have a significant stake

Key Insights

• The considerable ownership by private companies in Ningbo KBE Electrical TechnologyLtd indicates that they collectively have a greater say in management and business strategy
• Ningbo Xinxie Industrial Group Co., Ltd. owns 57% of the company
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

To get a sense of who is truly in control of Ningbo KBE Electrical Technology Co.,Ltd. (SZSE:300863), it is important to understand the ownership structure of the business. With 57% stake, private companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, private companies as a group endured the highest losses last week after market cap fell by CN¥800m.

In the chart below, we zoom in on the different ownership groups of Ningbo KBE Electrical TechnologyLtd.

View our latest analysis for Ningbo KBE Electrical TechnologyLtd

What Does The Institutional Ownership Tell Us About Ningbo KBE Electrical TechnologyLtd?

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.

As you can see, institutional investors have a fair amount of stake in Ningbo KBE Electrical TechnologyLtd. 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. 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 Ningbo KBE Electrical TechnologyLtd, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Ningbo KBE Electrical TechnologyLtd. Ningbo Xinxie Industrial Group Co., Ltd. is currently the company's largest shareholder with 57% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Guangyao Lin is the second largest shareholder owning 3.6% of common stock, and Jinjiang Yidian Najin Asset Management Co., Ltd. holds about 1.2% of the company stock. Guangyao Lin, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Ningbo KBE Electrical TechnologyLtd

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.

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.

Shareholders would probably be interested to learn that insiders own shares in Ningbo KBE Electrical Technology Co.,Ltd.. It has a market capitalization of just CN¥7.0b, and insiders have CN¥408m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 30% stake in Ningbo KBE Electrical TechnologyLtd. 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.

Private Company Ownership

We can see that Private Companies own 57%, of the shares on issue. 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. Take risks for example - Ningbo KBE Electrical TechnologyLtd has 2 warning signs (and 1 which is potentially serious) we think you should know about.

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.

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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.