UE Furniture Co., Ltd.'s (SHSE:603600) market cap surged CN¥366m last week, private companies who have a lot riding on the company were rewarded

Key Insights

• The considerable ownership by private companies in UE Furniture indicates that they collectively have a greater say in management and business strategy
• The top 3 shareholders own 53% of the company
• 11% of UE Furniture is held by insiders

If you want to know who really controls UE Furniture Co., Ltd. (SHSE:603600), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are private companies with 47% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Clearly, private companies benefitted the most after the company's market cap rose by CN¥366m last week.

Let's delve deeper into each type of owner of UE Furniture, beginning with the chart below.

See our latest analysis for UE Furniture

What Does The Institutional Ownership Tell Us About UE Furniture?

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.

UE Furniture already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see UE Furniture's historic earnings and revenue below, but keep in mind there's always more to the story.

UE Furniture is not owned by hedge funds. The company's largest shareholder is Yongyi Investment Co.,Ltd., with ownership of 33%. Meanwhile, the second and third largest shareholders, hold 14% and 6.5%, of the shares outstanding, respectively. Jiayong Zhang, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 53% stake.

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. 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 UE Furniture

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.

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.

It seems insiders own a significant proportion of UE Furniture Co., Ltd.. Insiders have a CN¥371m stake in this CN¥3.5b business. 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

The general public-- including retail investors -- own 24% stake in the company, and hence can't easily be ignored. 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 47%, of the company's shares. 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 UE Furniture better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for UE Furniture (of which 1 makes us a bit uncomfortable!) you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com