Shanghai Zhongchen Electronic Technology Co.,Ltd.'s (SHSE:603275) market cap dropped CN¥396m last week; Private companies bore the brunt

Key Insights

• Significant control over Shanghai Zhongchen Electronic TechnologyLtd by private companies implies that the general public has more power to influence management and governance-related decisions
• 57% of the business is held by the top 3 shareholders
• Insider ownership in Shanghai Zhongchen Electronic TechnologyLtd is 25%

If you want to know who really controls Shanghai Zhongchen Electronic Technology Co.,Ltd. (SHSE:603275), then you'll have to look at the makeup of its share registry. With 43% stake, private companies possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And last week, private companies endured the biggest losses as the stock fell by 7.5%.

In the chart below, we zoom in on the different ownership groups of Shanghai Zhongchen Electronic TechnologyLtd.

Check out our latest analysis for Shanghai Zhongchen Electronic TechnologyLtd

What Does The Institutional Ownership Tell Us About Shanghai Zhongchen Electronic 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.

Institutions have a very small stake in Shanghai Zhongchen Electronic TechnologyLtd. That indicates that the company is on the radar of some funds, but it isn't particularly popular with professional investors at the moment. So if the company itself can improve over time, we may well see more institutional buyers in the future. We sometimes see a rising share price when a few big institutions want to buy a certain stock at the same time. The history of earnings and revenue, which you can see below, could be helpful in considering if more institutional investors will want the stock. Of course, there are plenty of other factors to consider, too.

Hedge funds don't have many shares in Shanghai Zhongchen Electronic TechnologyLtd. The company's largest shareholder is Shanghai Zhongting Intelligent Technology Co., Ltd., with ownership of 33%. In comparison, the second and third largest shareholders hold about 16% and 7.8% of the stock. Jianjun Zhang, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Shanghai Zhongchen Electronic TechnologyLtd

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.

It seems insiders own a significant proportion of Shanghai Zhongchen Electronic Technology Co.,Ltd.. It has a market capitalization of just CN¥4.9b, and insiders have CN¥1.2b 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

The general public-- including retail investors -- own 31% stake in the company, and hence can't easily be ignored. 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 43%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the 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. To that end, you should be aware of the 1 warning sign we've spotted with Shanghai Zhongchen Electronic TechnologyLtd .

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.