Private companies are Shanghai Laiyifen Co.,Ltd's (SHSE:603777) biggest owners and were rewarded after market cap rose by CN¥922m last week

Key Insights

• Shanghai LaiyifenLtd's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• 53% of the company is held by a single shareholder (Shanghai Aiwu Business Management Co., Ltd.)
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

A look at the shareholders of Shanghai Laiyifen Co.,Ltd (SHSE:603777) can tell us which group is most powerful. We can see that private companies own the lion's share in the company with 56% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, private companies were the biggest beneficiaries of last week’s 19% gain.

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

Check out our latest analysis for Shanghai LaiyifenLtd

What Does The Institutional Ownership Tell Us About Shanghai LaiyifenLtd?

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.

Less than 5% of Shanghai LaiyifenLtd is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

We note that hedge funds don't have a meaningful investment in Shanghai LaiyifenLtd. Shanghai Aiwu Business Management Co., Ltd. is currently the largest shareholder, with 53% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. In comparison, the second and third largest shareholders hold about 3.2% and 3.0% of the stock. Ruifen Yu, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Shanghai LaiyifenLtd

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

We can see that insiders own shares in Shanghai Laiyifen Co.,Ltd. In their own names, insiders own CN¥438m worth of stock in the CN¥5.8b 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, who are usually individual investors, hold a 31% stake in Shanghai LaiyifenLtd. 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 56%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Shanghai LaiyifenLtd better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Shanghai LaiyifenLtd (of which 1 is a bit concerning!) you should know about.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.