Private companies among China Railway Construction Corporation Limited's (SHSE:601186) largest stockholders and were hit after last week's 5.3% price drop

Key Insights

• Significant control over China Railway Construction by private companies implies that the general public has more power to influence management and governance-related decisions
• China Railway Construction Corporation Group owns 51% of the company
• 11% of China Railway Construction is held by Institutions

A look at the shareholders of China Railway Construction Corporation Limited (SHSE:601186) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private companies with 51% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And following last week's 5.3% decline in share price, private companies suffered the most losses.

In the chart below, we zoom in on the different ownership groups of China Railway Construction.

Check out our latest analysis for China Railway Construction

What Does The Institutional Ownership Tell Us About China Railway Construction?

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 China Railway Construction. 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 China Railway Construction, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in China Railway Construction. China Railway Construction Corporation Group is currently the company's largest shareholder with 51% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. For context, the second largest shareholder holds about 2.4% of the shares outstanding, followed by an ownership of 1.0% by the third-largest shareholder.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. 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 China Railway Construction

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

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 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 37% ownership, the general public, mostly comprising of individual investors, have some degree of sway over China Railway Construction. 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

It seems that Private Companies own 51%, of the China Railway Construction stock. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand China Railway Construction better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for China Railway Construction you should be aware of, and 1 of them is a bit concerning.

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.