Stock Analysis

Individual investors in Guizhou Zhenhua E-chem Inc. (SHSE:688707) are its biggest bettors, and their bets paid off as stock gained 6.3% last week

SHSE:688707
Source: Shutterstock

Key Insights

  • The considerable ownership by individual investors in Guizhou Zhenhua E-chem indicates that they collectively have a greater say in management and business strategy
  • A total of 7 investors have a majority stake in the company with 51% ownership
  • Institutional ownership in Guizhou Zhenhua E-chem is 21%

To get a sense of who is truly in control of Guizhou Zhenhua E-chem Inc. (SHSE:688707), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual investors with 38% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Clearly, individual investors benefitted the most after the company's market cap rose by CN¥387m last week.

Let's take a closer look to see what the different types of shareholders can tell us about Guizhou Zhenhua E-chem.

Check out our latest analysis for Guizhou Zhenhua E-chem

ownership-breakdown
SHSE:688707 Ownership Breakdown December 5th 2024

What Does The Institutional Ownership Tell Us About Guizhou Zhenhua E-chem?

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 Guizhou Zhenhua E-chem. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Guizhou Zhenhua E-chem's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
SHSE:688707 Earnings and Revenue Growth December 5th 2024

Hedge funds don't have many shares in Guizhou Zhenhua E-chem. The company's largest shareholder is China Electronics Corporation, with ownership of 30%. In comparison, the second and third largest shareholders hold about 5.4% and 4.9% of the stock. Furthermore, CEO Qianxin Xiang is the owner of 1.1% of the company's shares.

We did some more digging and found that 7 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Guizhou Zhenhua E-chem

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.

We can see that insiders own shares in Guizhou Zhenhua E-chem Inc.. It has a market capitalization of just CN¥6.6b, and insiders have CN¥177m worth of shares, in their own names. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 38% stake in Guizhou Zhenhua E-chem. 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 Equity Ownership

With a stake of 5.4%, private equity firms could influence the Guizhou Zhenhua E-chem board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

It seems that Private Companies own 30%, of the Guizhou Zhenhua E-chem 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:

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. Case in point: We've spotted 3 warning signs for Guizhou Zhenhua E-chem you should be aware of, and 1 of them is significant.

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.