Private companies among Shanghai Ziyan Foods Co., Ltd.'s (SHSE:603057) largest stockholders and were hit after last week's 6.8% price drop

Key Insights

• Significant control over Shanghai Ziyan Foods by private companies implies that the general public has more power to influence management and governance-related decisions
• 58% of the business is held by the top 3 shareholders
• 39% of Shanghai Ziyan Foods is held by insiders

To get a sense of who is truly in control of Shanghai Ziyan Foods Co., Ltd. (SHSE:603057), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 43% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders who own 39% came under pressure after market cap dropped to CN¥6.4b last week,private companies took the most losses.

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

Check out our latest analysis for Shanghai Ziyan Foods

What Does The Institutional Ownership Tell Us About Shanghai Ziyan Foods?

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.

We can see that Shanghai Ziyan Foods 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Shanghai Ziyan Foods' historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Shanghai Ziyan Foods. Ningguo Chuanqin Enterprise Management Consulting Service Partnership Enterprise (Limited Partnershi is currently the company's largest shareholder with 25% of shares outstanding. With 19% and 14% of the shares outstanding respectively, Huaijun Zhong and Huiling Deng are the second and third largest shareholders. Furthermore, CEO Wuchao Ge is the owner of 5.6% of the company's shares.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. 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 Shanghai Ziyan Foods

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 information suggests that insiders maintain a significant holding in Shanghai Ziyan Foods Co., Ltd.. Insiders own CN¥2.5b worth of shares in the CN¥6.4b company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 10% stake in Shanghai Ziyan Foods. 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 43%, of the Shanghai Ziyan Foods 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Shanghai Ziyan Foods has 2 warning signs (and 1 which is a bit concerning) we think you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.

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

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