Zhejiang Tongxing Technology CO., Ltd. (SZSE:301252) surges 14%; private companies who own 46% shares profited along with insiders

Key Insights

• The considerable ownership by private companies in Zhejiang Tongxing Technology indicates that they collectively have a greater say in management and business strategy
• 55% of the business is held by the top 2 shareholders
• Insiders own 27% of Zhejiang Tongxing Technology

A look at the shareholders of Zhejiang Tongxing Technology CO., Ltd. (SZSE:301252) can tell us which group is most powerful. The group holding the most number of shares in the company, around 46% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

While private companies were the group that reaped the most benefits after last week’s 14% price gain, insiders also received a 27% cut.

Let's delve deeper into each type of owner of Zhejiang Tongxing Technology, beginning with the chart below.

View our latest analysis for Zhejiang Tongxing Technology

What Does The Institutional Ownership Tell Us About Zhejiang Tongxing Technology?

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.

Since institutions own only a small portion of Zhejiang Tongxing Technology, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. 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.

We note that hedge funds don't have a meaningful investment in Zhejiang Tongxing Technology. Xinchang County Tongxing Investment Co., Ltd. is currently the largest shareholder, with 36% of shares outstanding. With 19% and 10.0% of the shares outstanding respectively, Liangcan Zhang and Xinchang County Tianqin Investment Management Partnership Enterprise (Limited Partnership) are the second and third largest shareholders. Furthermore, CEO Tianhong Zhang is the owner of 4.8% of the company's shares.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. 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 Zhejiang Tongxing Technology

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 Tongxing Technology CO., Ltd.. Insiders own CN¥1.2b worth of shares in the CN¥4.6b company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 25% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Zhejiang Tongxing Technology. 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 Company Ownership

Our data indicates that Private Companies hold 46%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Zhejiang Tongxing Technology better, we need to consider many other factors. Take risks for example - Zhejiang Tongxing Technology has 3 warning signs (and 2 which are significant) we think you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.