Zhejiang Weixing New Building Materials Co., Ltd.'s (SZSE:002372) stock price dropped 6.0% last week; private companies would not be happy

Key Insights

• Zhejiang Weixing New Building Materials' significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 2 investors have a majority stake in the company with 53% ownership
• 11% of Zhejiang Weixing New Building Materials is held by insiders

To get a sense of who is truly in control of Zhejiang Weixing New Building Materials Co., Ltd. (SZSE:002372), it is important to understand the ownership structure of the business. We can see that private companies own the lion's share in the company with 53% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And following last week's 6.0% decline in share price, private companies suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Zhejiang Weixing New Building Materials.

Check out our latest analysis for Zhejiang Weixing New Building Materials

What Does The Institutional Ownership Tell Us About Zhejiang Weixing New Building Materials?

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.

Zhejiang Weixing New Building Materials already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Zhejiang Weixing New Building Materials' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Zhejiang Weixing New Building Materials. Weixing Group Co.,Ltd. is currently the company's largest shareholder with 38% of shares outstanding. In comparison, the second and third largest shareholders hold about 15% and 5.3% of the stock. Kapeng Zhang, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors. Furthermore, CEO Hongyang Jin is the owner of 1.1% of the company's shares.

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 studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Zhejiang Weixing New Building Materials

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 information suggests that insiders maintain a significant holding in Zhejiang Weixing New Building Materials Co., Ltd.. It is very interesting to see that insiders have a meaningful CN¥1.9b stake in this CN¥17b business. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public-- including retail investors -- own 24% stake in the company, and hence can't easily be ignored. 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

Our data indicates that Private Companies hold 53%, of the company's shares. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Zhejiang Weixing New Building Materials better, we need to consider many other factors. For instance, we've identified 1 warning sign for Zhejiang Weixing New Building Materials that 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.