Bafang Electric (Suzhou) Co.,Ltd.'s (SHSE:603489) largest shareholder, CEO Qinghua Wang sees holdings value fall by 14% following recent drop

Key Insights

• Significant insider control over Bafang Electric (Suzhou)Ltd implies vested interests in company growth
• 57% of the business is held by the top 2 shareholders
• Institutions own 12% of Bafang Electric (Suzhou)Ltd

To get a sense of who is truly in control of Bafang Electric (Suzhou) Co.,Ltd. (SHSE:603489), it is important to understand the ownership structure of the business. We can see that individual insiders own the lion's share in the company with 66% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And following last week's 14% decline in share price, insiders suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Bafang Electric (Suzhou)Ltd.

View our latest analysis for Bafang Electric (Suzhou)Ltd

What Does The Institutional Ownership Tell Us About Bafang Electric (Suzhou)Ltd?

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.

We can see that Bafang Electric (Suzhou)Ltd does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Bafang Electric (Suzhou)Ltd's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Bafang Electric (Suzhou)Ltd. The company's CEO Qinghua Wang is the largest shareholder with 41% of shares outstanding. With 16% and 8.7% of the shares outstanding respectively, Xianbing He and Zhenhua Yu are the second and third largest shareholders. Note that two of the top three shareholders are also Senior Key Executive and Member of the Board of Directors, respectively, once again pointing to significant ownership by company insiders.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Bafang Electric (Suzhou)Ltd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 information suggests that insiders own more than half of Bafang Electric (Suzhou) Co.,Ltd.. This gives them effective control of the company. Given it has a market cap of CN¥5.0b, that means they have CN¥3.3b worth of shares. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 15% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Bafang Electric (Suzhou)Ltd. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

We can see that Private Companies own 7.5%, of the shares on issue. 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 Bafang Electric (Suzhou)Ltd better, we need to consider many other factors. For instance, we've identified 3 warning signs for Bafang Electric (Suzhou)Ltd (1 is a bit unpleasant) that you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.