Recent 13% pullback would hurt Jinhua Chunguang Technology Co.,Ltd (SHSE:603657) insiders

Key Insights

• Insiders appear to have a vested interest in Jinhua Chunguang TechnologyLtd's growth, as seen by their sizeable ownership
• Zhengming Chen owns 58% of the company
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

To get a sense of who is truly in control of Jinhua Chunguang Technology Co.,Ltd (SHSE:603657), it is important to understand the ownership structure of the business. With 64% stake, individual insiders possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As market cap fell to CN¥2.1b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

Let's delve deeper into each type of owner of Jinhua Chunguang TechnologyLtd, beginning with the chart below.

See our latest analysis for Jinhua Chunguang TechnologyLtd

What Does The Institutional Ownership Tell Us About Jinhua Chunguang TechnologyLtd?

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.

Jinhua Chunguang TechnologyLtd already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Jinhua Chunguang TechnologyLtd, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Jinhua Chunguang TechnologyLtd. Zhengming Chen is currently the largest shareholder, with 58% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Kai Chen is the second largest shareholder owning 4.7% of common stock, and Jinhua Kaihong Investment Partnership Enterprise (Limited Partnership) holds about 4.3% of the company stock. Kai Chen, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Jinhua Chunguang TechnologyLtd

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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our information suggests that insiders own more than half of Jinhua Chunguang Technology Co.,Ltd. This gives them effective control of the company. That means they own CN¥1.3b worth of shares in the CN¥2.1b company. That's quite meaningful. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 25% stake in Jinhua Chunguang TechnologyLtd. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

It seems that Private Companies own 5.2%, of the Jinhua Chunguang TechnologyLtd stock. 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 Jinhua Chunguang TechnologyLtd better, we need to consider many other factors. Take risks for example - Jinhua Chunguang TechnologyLtd has 1 warning sign we think you should be aware of.

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.