Huafon Chemical Co.,Ltd's (SZSE:002064) largest shareholders are private companies with 45% ownership, individual investors own 26%

Key Insights

• Significant control over Huafon ChemicalLtd by private companies implies that the general public has more power to influence management and governance-related decisions
• 53% of the business is held by the top 2 shareholders
• Insider ownership in Huafon ChemicalLtd is 22%

A look at the shareholders of Huafon Chemical Co.,Ltd (SZSE:002064) can tell us which group is most powerful. We can see that private companies own the lion's share in the company with 45% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Meanwhile, individual investors make up 26% of the company’s shareholders.

Let's delve deeper into each type of owner of Huafon ChemicalLtd, beginning with the chart below.

See our latest analysis for Huafon ChemicalLtd

What Does The Institutional Ownership Tell Us About Huafon ChemicalLtd?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that Huafon ChemicalLtd does have institutional investors; and they hold a good portion of the company's stock. 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 Huafon ChemicalLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

Huafon ChemicalLtd is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Huafon Group Co., Ltd. with 45% of shares outstanding. With 8.0% and 6.6% of the shares outstanding respectively, Xiaoping You and Xiaohua You are the second and third largest shareholders.

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.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Huafon ChemicalLtd

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 information suggests that insiders maintain a significant holding in Huafon Chemical Co.,Ltd. It has a market capitalization of just CN¥38b, and insiders have CN¥8.2b worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

With a 26% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Huafon ChemicalLtd. 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 45%, of the Huafon ChemicalLtd 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. For instance, we've identified 1 warning sign for Huafon ChemicalLtd that you should be aware of.

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.