Power Construction Corporation of China, Ltd's (SHSE:601669) last week's 4.0% decline must have disappointed private companies who have a significant stake

Key Insights

• The considerable ownership by private companies in Power Construction Corporation of China indicates that they collectively have a greater say in management and business strategy
• 53% of the company is held by a single shareholder (Power Construction Corporation Of China)
• 14% of Power Construction Corporation of China is held by Institutions

To get a sense of who is truly in control of Power Construction Corporation of China, Ltd (SHSE:601669), it is important to understand the ownership structure of the business. With 54% 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¥3.8b.

Let's take a closer look to see what the different types of shareholders can tell us about Power Construction Corporation of China.

View our latest analysis for Power Construction Corporation of China

What Does The Institutional Ownership Tell Us About Power Construction Corporation of China?

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.

We can see that Power Construction Corporation of China does have institutional investors; and they hold a good portion of the company's stock. 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 Power Construction Corporation of China'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 Power Construction Corporation of China. Power Construction Corporation Of China is currently the largest shareholder, with 53% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. With 3.2% and 2.5% of the shares outstanding respectively, Taiping Asset Management Company Limited and China Securities Finance Corp, Asset Management Arm are the second and third largest shareholders.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Power Construction Corporation of China

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. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 32% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Power Construction Corporation of China. 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

We can see that Private Companies own 54%, 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Power Construction Corporation of China (of which 1 doesn't sit too well with us!) you should know about.

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.

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