Shanxi Lanhua Sci-Tech Venture Co.,Ltd's (SHSE:600123) last week's 5.0% decline must have disappointed private companies who have a significant stake

Key Insights

• The considerable ownership by private companies in Shanxi Lanhua Sci-Tech VentureLtd indicates that they collectively have a greater say in management and business strategy
• A total of 6 investors have a majority stake in the company with 50% ownership
• 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 Shanxi Lanhua Sci-Tech Venture Co.,Ltd (SHSE:600123), 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 46% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, private companies as a group endured the highest losses last week after market cap fell by CN¥668m.

In the chart below, we zoom in on the different ownership groups of Shanxi Lanhua Sci-Tech VentureLtd.

Check out our latest analysis for Shanxi Lanhua Sci-Tech VentureLtd

What Does The Institutional Ownership Tell Us About Shanxi Lanhua Sci-Tech VentureLtd?

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.

We can see that Shanxi Lanhua Sci-Tech VentureLtd does have institutional investors; and they hold a good portion of the company's stock. 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 Shanxi Lanhua Sci-Tech VentureLtd's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Shanxi Lanhua Sci-Tech VentureLtd. Shanxi Lanhua Coal Industry Group Co.LTD is currently the largest shareholder, with 45% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 2.6% and 0.8%, of the shares outstanding, respectively.

On further inspection, we found that more than half the company's shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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

Insider Ownership Of Shanxi Lanhua Sci-Tech VentureLtd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 most recent data indicates that insiders own less than 1% of Shanxi Lanhua Sci-Tech Venture Co.,Ltd. However, it's possible that insiders might have an indirect interest through a more complex structure. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around CN¥691k worth of shares (at current prices). It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 45% 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

It seems that Private Companies own 46%, of the Shanxi Lanhua Sci-Tech VentureLtd stock. 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 Shanxi Lanhua Sci-Tech VentureLtd better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Shanxi Lanhua Sci-Tech VentureLtd , and understanding them should be part of your investment process.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com