ChangZhou KAIDI Electrical Inc.'s (SHSE:605288) market cap dropped CN¥247m last week; Private companies bore the brunt

Key Insights

• Significant control over ChangZhou KAIDI Electrical by private companies implies that the general public has more power to influence management and governance-related decisions
• 67% of the business is held by the top 2 shareholders
• Insiders own 23% of ChangZhou KAIDI Electrical

If you want to know who really controls ChangZhou KAIDI Electrical Inc. (SHSE:605288), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are private companies with 52% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders, who own 23% shares weren’t spared from last week’s CN¥247m market cap drop, private companies as a group suffered the maximum losses

Let's delve deeper into each type of owner of ChangZhou KAIDI Electrical, beginning with the chart below.

See our latest analysis for ChangZhou KAIDI Electrical

What Does The Institutional Ownership Tell Us About ChangZhou KAIDI Electrical?

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.

Institutions have a very small stake in ChangZhou KAIDI Electrical. 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.

We note that hedge funds don't have a meaningful investment in ChangZhou KAIDI Electrical. Changzhou Kaizhong Investment Co., Ltd. is currently the largest shareholder, with 45% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 22% and 7.3%, of the shares outstanding, respectively. Shucheng Zhou, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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 ChangZhou KAIDI Electrical

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own a reasonable proportion of ChangZhou KAIDI Electrical Inc.. Insiders have a CN¥496m stake in this CN¥2.2b business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

With a 21% ownership, the general public, mostly comprising of individual investors, have some degree of sway over ChangZhou KAIDI Electrical. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

We can see that Private Companies own 52%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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 - ChangZhou KAIDI Electrical has 2 warning signs (and 1 which is potentially serious) we think you should know about.

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.

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

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.