Ningbo Orient Wires & Cables Co.,Ltd.'s (SHSE:603606) market cap dropped CN¥1.3b last week; Private companies bore the brunt

Key Insights

• The considerable ownership by private companies in Ningbo Orient Wires & CablesLtd indicates that they collectively have a greater say in management and business strategy
• The top 10 shareholders own 51% of the company
• 24% of Ningbo Orient Wires & CablesLtd is held by Institutions

To get a sense of who is truly in control of Ningbo Orient Wires & Cables Co.,Ltd. (SHSE:603606), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 36% to be precise, is private companies. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As market cap fell to CN¥32b last week, private companies would have faced the highest losses than any other shareholder groups of the company.

Let's take a closer look to see what the different types of shareholders can tell us about Ningbo Orient Wires & CablesLtd.

View our latest analysis for Ningbo Orient Wires & CablesLtd

What Does The Institutional Ownership Tell Us About Ningbo Orient Wires & CablesLtd?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that Ningbo Orient Wires & CablesLtd 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. 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 Orient Wires & CablesLtd, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Ningbo Orient Wires & CablesLtd. The company's largest shareholder is Ningbo Orient Group Co., Ltd., with ownership of 32%. With 6.8% and 2.4% of the shares outstanding respectively, Liyu Yuan and Ningbo Huaxia Technology Investment Co., Ltd. are the second and third largest shareholders.

We also observed that the top 10 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.

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

Insider Ownership Of Ningbo Orient Wires & CablesLtd

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 most recent data indicates that insiders own some shares in Ningbo Orient Wires & Cables Co.,Ltd.. This is a big company, so it is good to see this level of alignment. Insiders own CN¥2.2b worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

With a 33% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Ningbo Orient Wires & CablesLtd. 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 36%, of the Ningbo Orient Wires & CablesLtd 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:

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 Orient Wires & CablesLtd has 1 warning sign we think you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.