Private companies are Luolai Lifestyle Technology Co., Ltd.'s (SZSE:002293) biggest owners and were hit after market cap dropped CN¥389m

Key Insights

• Luolai Lifestyle Technology's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 5 shareholders own 53% of the company
• Insider ownership in Luolai Lifestyle Technology is 16%

To get a sense of who is truly in control of Luolai Lifestyle Technology Co., Ltd. (SZSE:002293), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are private companies with 40% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 6.9% decline in share price, private companies suffered the most losses.

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

Check out our latest analysis for Luolai Lifestyle Technology

What Does The Institutional Ownership Tell Us About Luolai Lifestyle Technology?

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.

As you can see, institutional investors have a fair amount of stake in Luolai Lifestyle Technology. 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 Luolai Lifestyle Technology, (below). Of course, keep in mind that there are other factors to consider, too.

Luolai Lifestyle Technology is not owned by hedge funds. The company's largest shareholder is Weijia International Enterprise Co., Ltd., with ownership of 17%. With 15% and 9.3% of the shares outstanding respectively, Shanghai Luolai Investment Holding Co., Ltd. and Weicheng Xue are the second and third largest shareholders. Weicheng Xue, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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. 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 Luolai Lifestyle Technology

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 information suggests that insiders maintain a significant holding in Luolai Lifestyle Technology Co., Ltd.. Insiders have a CN¥839m stake in this CN¥5.3b business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 36% stake in Luolai Lifestyle Technology. 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

We can see that Private Companies own 40%, of the shares on issue. 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. For example, we've discovered 1 warning sign for Luolai Lifestyle Technology that you should be aware of before investing here.

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.