Sinoma Science & Technology Co.,Ltd.'s (SZSE:002080) market cap dropped CN¥705m last week; Public companies bore the brunt

Key Insights

• Significant control over Sinoma Science & TechnologyLtd by public companies implies that the general public has more power to influence management and governance-related decisions
• 60% of the company is held by a single shareholder (China National Building Material Company Limited)
• Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

If you want to know who really controls Sinoma Science & Technology Co.,Ltd. (SZSE:002080), then you'll have to look at the makeup of its share registry. We can see that public companies own the lion's share in the company with 60% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 3.0% decline in share price, public companies suffered the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about Sinoma Science & TechnologyLtd.

Check out our latest analysis for Sinoma Science & TechnologyLtd

What Does The Institutional Ownership Tell Us About Sinoma Science & TechnologyLtd?

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 Sinoma Science & TechnologyLtd 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Sinoma Science & TechnologyLtd, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Sinoma Science & TechnologyLtd. China National Building Material Company Limited is currently the largest shareholder, with 60% of shares outstanding. This implies that they have majority interest control of the future of the company. For context, the second largest shareholder holds about 0.9% of the shares outstanding, followed by an ownership of 0.5% by the third-largest shareholder.

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 Sinoma Science & TechnologyLtd

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

We note our data does not show any board members holding shares, personally. It is unusual not to have at least some personal holdings by board members, so our data might be flawed. A good next step would be to check how much the CEO is paid.

General Public Ownership

The general public-- including retail investors -- own 34% 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.

Public Company Ownership

We can see that public companies hold 60% of the Sinoma Science & TechnologyLtd shares on issue. 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 Sinoma Science & TechnologyLtd better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for Sinoma Science & TechnologyLtd 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.