Dalian BIO-CHEM Company Limited (SHSE:603360) surges 8.8%; individual investors who own 36% shares profited along with insiders

Key Insights

• Significant control over Dalian BIO-CHEM by individual investors implies that the general public has more power to influence management and governance-related decisions
• 57% of the business is held by the top 2 shareholders
• Insider ownership in Dalian BIO-CHEM is 31%

To get a sense of who is truly in control of Dalian BIO-CHEM Company Limited (SHSE:603360), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 36% to be precise, is individual investors. Put another way, the group faces the maximum upside potential (or downside risk).

Individual investors gained the most after market cap touched CN¥11b last week, while insiders who own 31% also benefitted.

In the chart below, we zoom in on the different ownership groups of Dalian BIO-CHEM.

Check out our latest analysis for Dalian BIO-CHEM

What Does The Lack Of Institutional Ownership Tell Us About Dalian BIO-CHEM?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Dalian BIO-CHEM's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

Dalian BIO-CHEM is not owned by hedge funds. Xian Wu Liu is currently the largest shareholder, with 31% of shares outstanding. In comparison, the second and third largest shareholders hold about 26% and 2.7% 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 57% stake.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Dalian BIO-CHEM

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 information suggests that insiders maintain a significant holding in Dalian BIO-CHEM Company Limited. Insiders own CN¥3.5b worth of shares in the CN¥11b 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

With a 36% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Dalian BIO-CHEM. 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 31%, of the company's shares. 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:

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 1 warning sign for Dalian BIO-CHEM that you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.