Private companies invested in Zhe Jiang Hai Liang Co., Ltd (SZSE:002203) copped the brunt of last week's CN¥580m market cap decline

Key Insights

• Significant control over Zhe Jiang Hai Liang by private companies implies that the general public has more power to influence management and governance-related decisions
• 50% of the business is held by the top 6 shareholders
• 11% of Zhe Jiang Hai Liang is held by Institutions

To get a sense of who is truly in control of Zhe Jiang Hai Liang Co., Ltd (SZSE:002203), it is important to understand the ownership structure of the business. With 40% stake, private companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 3.6% decline in share price, private companies suffered the most losses.

Let's delve deeper into each type of owner of Zhe Jiang Hai Liang, beginning with the chart below.

View our latest analysis for Zhe Jiang Hai Liang

What Does The Institutional Ownership Tell Us About Zhe Jiang Hai Liang?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Zhe Jiang Hai Liang already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Zhe Jiang Hai Liang's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Zhe Jiang Hai Liang. The company's largest shareholder is Hailiang Group Co., Ltd., with ownership of 29%. In comparison, the second and third largest shareholders hold about 11% and 3.1% of the stock.

We also observed that the top 6 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Zhe Jiang Hai Liang

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. 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.

We can report that insiders do own shares in Zhe Jiang Hai Liang Co., Ltd. This is a big company, so it is good to see this level of alignment. Insiders own CN¥1.1b worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 38% 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.

Private Company Ownership

We can see that Private Companies own 40%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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. Case in point: We've spotted 2 warning signs for Zhe Jiang Hai Liang you should be aware of, and 1 of them doesn't sit too well with us.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.

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