Shenzhen Magic Design & Decoration Engineering Co., Ltd.'s (SZSE:002856) biggest owners are individual investors who got richer after stock soared 10% last week

Key Insights

• The considerable ownership by individual investors in Shenzhen Magic Design & Decoration Engineering indicates that they collectively have a greater say in management and business strategy
• The top 11 shareholders own 48% of the company
• Insider ownership in Shenzhen Magic Design & Decoration Engineering is 14%

To get a sense of who is truly in control of Shenzhen Magic Design & Decoration Engineering Co., Ltd. (SZSE:002856), it is important to understand the ownership structure of the business. We can see that individual investors own the lion's share in the company with 52% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, individual investors collectively scored the highest last week as the company hit CN¥1.0b market cap following a 10% gain in the stock.

Let's delve deeper into each type of owner of Shenzhen Magic Design & Decoration Engineering, beginning with the chart below.

See our latest analysis for Shenzhen Magic Design & Decoration Engineering

What Does The Institutional Ownership Tell Us About Shenzhen Magic Design & Decoration Engineering?

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 Shenzhen Magic Design & Decoration Engineering. 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. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

Hedge funds don't have many shares in Shenzhen Magic Design & Decoration Engineering. Shenzhen Shanhui Investment Management Co., Ltd. is currently the largest shareholder, with 30% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 14% and 1.0%, of the shares outstanding, respectively.

On studying our ownership data, we found that 11 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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 Shenzhen Magic Design & Decoration Engineering

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 most recent data indicates that insiders own a reasonable proportion of Shenzhen Magic Design & Decoration Engineering Co., Ltd.. Insiders have a CN¥140m stake in this CN¥1.0b 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

The general public -- including retail investors -- own 52% of Shenzhen Magic Design & Decoration Engineering. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Equity Ownership

With an ownership of 30%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Shenzhen Magic Design & Decoration Engineering (of which 2 are significant!) you should know about.

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.