Henan Pinggao Electric Co.,Ltd.'s (SHSE:600312) largest shareholders are private companies who were rewarded as market cap surged CN¥1.8b last week

Key Insights

• Significant control over Henan Pinggao ElectricLtd by private companies implies that the general public has more power to influence management and governance-related decisions
• A total of 6 investors have a majority stake in the company with 51% ownership
• Institutional ownership in Henan Pinggao ElectricLtd is 17%

To get a sense of who is truly in control of Henan Pinggao Electric Co.,Ltd. (SHSE:600312), it is important to understand the ownership structure of the business. With 45% stake, private companies possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, private companies were the biggest beneficiaries of last week’s 7.0% gain.

In the chart below, we zoom in on the different ownership groups of Henan Pinggao ElectricLtd.

View our latest analysis for Henan Pinggao ElectricLtd

What Does The Institutional Ownership Tell Us About Henan Pinggao ElectricLtd?

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.

Henan Pinggao ElectricLtd already has institutions on the share registry. Indeed, they own a respectable stake in 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. 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 Henan Pinggao ElectricLtd'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 Henan Pinggao ElectricLtd. Our data shows that China Electric Equipment Group Co., Ltd. is the largest shareholder with 41% of shares outstanding. In comparison, the second and third largest shareholders hold about 2.5% and 2.0% of the stock.

We also observed that the top 6 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Henan Pinggao ElectricLtd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 data cannot confirm that board members are holding shares personally. It is unusual not to have at least some personal holdings by board members, so our data might be flawed. A good next step would be to check how much the CEO is paid.

General Public Ownership

With a 38% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Henan Pinggao ElectricLtd. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

Our data indicates that Private Companies hold 45%, 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. For instance, we've identified 1 warning sign for Henan Pinggao ElectricLtd that 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.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com