C.Q. Pharmaceutical Holding Co., Ltd.'s (SZSE:000950) largest shareholders are private companies who were rewarded as market cap surged CN¥899m last week

Key Insights

• The considerable ownership by private companies in C.Q. Pharmaceutical Holding indicates that they collectively have a greater say in management and business strategy
• A total of 2 investors have a majority stake in the company with 55% ownership
• 10% of C.Q. Pharmaceutical Holding is held by Institutions

If you want to know who really controls C.Q. Pharmaceutical Holding Co., Ltd. (SZSE:000950), then you'll have to look at the makeup of its share registry. We can see that private companies own the lion's share in the company with 57% 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 8.6% gain.

Let's delve deeper into each type of owner of C.Q. Pharmaceutical Holding, beginning with the chart below.

Check out our latest analysis for C.Q. Pharmaceutical Holding

What Does The Institutional Ownership Tell Us About C.Q. Pharmaceutical Holding?

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.

C.Q. Pharmaceutical Holding 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. 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 C.Q. Pharmaceutical Holding's historic earnings and revenue below, but keep in mind there's always more to the story.

C.Q. Pharmaceutical Holding is not owned by hedge funds. Chongqing Pharmaceutical Health Industry Co., Ltd. is currently the largest shareholder, with 38% of shares outstanding. In comparison, the second and third largest shareholders hold about 16% and 3.2% of the stock.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 55% stake.

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 C.Q. Pharmaceutical Holding

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 data suggests that insiders own under 1% of C.Q. Pharmaceutical Holding Co., Ltd. in their own names. 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¥2.8m 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

With a 29% ownership, the general public, mostly comprising of individual investors, have some degree of sway over C.Q. Pharmaceutical Holding. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

Our data indicates that Private Companies hold 57%, of the company's shares. 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

It appears to us that public companies own 3.8% of C.Q. Pharmaceutical Holding. 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 C.Q. Pharmaceutical Holding better, we need to consider many other factors. Be aware that C.Q. Pharmaceutical Holding is showing 3 warning signs in our investment analysis , and 1 of those is concerning...

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.

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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.