Naipu Mining Machinery Co., Ltd.'s (SZSE:300818) market cap increased by CN¥389m, insiders receive a 58% cut

Key Insights

• Significant insider control over Naipu Mining Machinery implies vested interests in company growth
• Hao Zheng owns 52% of the company
• Institutional ownership in Naipu Mining Machinery is 10%

To get a sense of who is truly in control of Naipu Mining Machinery Co., Ltd. (SZSE:300818), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 58% to be precise, is individual insiders. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Clearly, insiders benefitted the most after the company's market cap rose by CN¥389m last week.

In the chart below, we zoom in on the different ownership groups of Naipu Mining Machinery.

Check out our latest analysis for Naipu Mining Machinery

What Does The Institutional Ownership Tell Us About Naipu Mining Machinery?

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.

As you can see, institutional investors have a fair amount of stake in Naipu Mining Machinery. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Naipu Mining Machinery, (below). Of course, keep in mind that there are other factors to consider, too.

Naipu Mining Machinery is not owned by hedge funds. The company's largest shareholder is Hao Zheng, with ownership of 52%. This implies that they have majority interest control of the future of the company. Zhiguo Qu is the second largest shareholder owning 5.5% of common stock, and Huashang Fund Management Company Ltd. holds about 2.2% of the company stock.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Naipu Mining Machinery

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. 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.

Our most recent data indicates that insiders own the majority of Naipu Mining Machinery Co., Ltd.. This means they can collectively make decisions for the company. So they have a CN¥2.2b stake in this CN¥3.7b business. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 30% stake in Naipu Mining Machinery. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Naipu Mining Machinery better, we need to consider many other factors. Take risks for example - Naipu Mining Machinery has 2 warning signs (and 1 which can't be ignored) we think you should know about.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.