GuangZhou Wahlap Technology Corporation Limited's (SZSE:301011) stock price dropped 12% last week; private companies would not be happy

Key Insights

• The considerable ownership by private companies in GuangZhou Wahlap Technology indicates that they collectively have a greater say in management and business strategy
• A total of 3 investors have a majority stake in the company with 53% ownership
• Institutions own 11% of GuangZhou Wahlap Technology

To get a sense of who is truly in control of GuangZhou Wahlap Technology Corporation Limited (SZSE:301011), 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 51% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, private companies as a group endured the highest losses last week after market cap fell by CN¥588m.

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

Check out our latest analysis for GuangZhou Wahlap Technology

What Does The Institutional Ownership Tell Us About GuangZhou Wahlap 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.

GuangZhou Wahlap Technology 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at GuangZhou Wahlap Technology's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in GuangZhou Wahlap Technology. The company's largest shareholder is Hong Kong Wahlap International Holdings Limited, with ownership of 44%. Meanwhile, the second and third largest shareholders, hold 5.8% and 3.6%, of the shares outstanding, respectively. Furthermore, CEO Benli Su is the owner of 2.0% of the company's shares.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of GuangZhou Wahlap Technology

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.

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 most recent data indicates that insiders own some shares in GuangZhou Wahlap Technology Corporation Limited. As individuals, the insiders collectively own CN¥116m worth of the CN¥4.2b company. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 28% stake in the company, and hence can't easily be ignored. 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 51%, 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.

Public Company Ownership

Public companies currently own 6.5% of GuangZhou Wahlap Technology stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand GuangZhou Wahlap Technology better, we need to consider many other factors. For example, we've discovered 3 warning signs for GuangZhou Wahlap Technology (2 are potentially serious!) that you should be aware of before investing here.

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.