Dianguang Explosion-proof Technology Co.,Ltd.'s (SZSE:002730) market cap dropped CN¥413m last week; Private companies bore the brunt

Key Insights

• Dianguang Explosion-proof TechnologyLtd's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• 50% of the business is held by the top 2 shareholders
• Insider ownership in Dianguang Explosion-proof TechnologyLtd is 10%

A look at the shareholders of Dianguang Explosion-proof Technology Co.,Ltd. (SZSE:002730) can tell us which group is most powerful. With 45% stake, private companies possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, private companies as a group endured the highest losses last week after market cap fell by CN¥413m.

In the chart below, we zoom in on the different ownership groups of Dianguang Explosion-proof TechnologyLtd.

See our latest analysis for Dianguang Explosion-proof TechnologyLtd

What Does The Institutional Ownership Tell Us About Dianguang Explosion-proof TechnologyLtd?

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.

Institutions have a very small stake in Dianguang Explosion-proof 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. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. 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 Dianguang Explosion-proof TechnologyLtd. Dianguang Technology Co.,Ltd. is currently the largest shareholder, with 45% of shares outstanding. For context, the second largest shareholder holds about 5.0% of the shares outstanding, followed by an ownership of 3.8% by the third-largest shareholder. Xiangcai Shi, 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 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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Dianguang Explosion-proof TechnologyLtd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

It seems insiders own a significant proportion of Dianguang Explosion-proof Technology Co.,Ltd.. It has a market capitalization of just CN¥7.6b, and insiders have CN¥782m worth of shares in their own names. That's quite significant. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 42% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Dianguang Explosion-proof TechnologyLtd. 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

It seems that Private Companies own 45%, of the Dianguang Explosion-proof TechnologyLtd stock. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Dianguang Explosion-proof TechnologyLtd better, we need to consider many other factors. For instance, we've identified 3 warning signs for Dianguang Explosion-proof TechnologyLtd (2 shouldn't be ignored) that you should be aware of.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.