LBX Pharmacy Chain Joint Stock Company (SHSE:603883) adds CN¥646m in market cap and insiders have a 29% stake in that gain

Key Insights

• Significant insider control over LBX Pharmacy Chain implies vested interests in company growth
• 50% of the business is held by the top 2 shareholders
• 19% of LBX Pharmacy Chain is held by Institutions

To get a sense of who is truly in control of LBX Pharmacy Chain Joint Stock Company (SHSE:603883), it is important to understand the ownership structure of the business. With 29% stake, individual insiders possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, insiders benefitted the most after the company's market cap rose by CN¥646m last week.

Let's delve deeper into each type of owner of LBX Pharmacy Chain, beginning with the chart below.

Check out our latest analysis for LBX Pharmacy Chain

What Does The Institutional Ownership Tell Us About LBX Pharmacy Chain?

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.

LBX Pharmacy Chain 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. 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 LBX Pharmacy Chain's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in LBX Pharmacy Chain. Zilong Xie is currently the largest shareholder, with 28% of shares outstanding. Leader (Cayman Islands) Limited is the second largest shareholder owning 22% of common stock, and Zhong Ou Fund Management Co., Ltd holds about 2.9% of the company stock.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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 LBX Pharmacy Chain

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.

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.

It seems insiders own a significant proportion of LBX Pharmacy Chain Joint Stock Company. Insiders own CN¥3.8b worth of shares in the CN¥13b 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-- including retail investors -- own 28% stake in the company, and hence can't easily be ignored. 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 23%, 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:

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 instance, we've identified 2 warning signs for LBX Pharmacy Chain (1 is concerning) that you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.