Henan Qingshuiyuan Technology CO.,Ltd's (SZSE:300437) stock price dropped 13% last week; individual investors would not be happy

Key Insights

• Significant control over Henan Qingshuiyuan TechnologyLtd by individual investors implies that the general public has more power to influence management and governance-related decisions
• A total of 12 investors have a majority stake in the company with 44% ownership
• Insider ownership in Henan Qingshuiyuan TechnologyLtd is 44%

To get a sense of who is truly in control of Henan Qingshuiyuan Technology CO.,Ltd (SZSE:300437), it is important to understand the ownership structure of the business. We can see that individual investors own the lion's share in the company with 56% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While insiders, who own 44% shares weren’t spared from last week’s CN¥414m market cap drop, individual investors as a group suffered the maximum losses

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

See our latest analysis for Henan Qingshuiyuan TechnologyLtd

What Does The Lack Of Institutional Ownership Tell Us About Henan Qingshuiyuan TechnologyLtd?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Henan Qingshuiyuan TechnologyLtd, for yourself, below.

Henan Qingshuiyuan TechnologyLtd is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO Zhi Qing Wang with 39% of shares outstanding. Yingbiao Song is the second largest shareholder owning 2.7% of common stock, and Zhong Sheng holds about 1.9% of the company stock.

On studying our ownership data, we found that 12 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Henan Qingshuiyuan TechnologyLtd

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own a reasonable proportion of Henan Qingshuiyuan Technology CO.,Ltd. Insiders own CN¥1.3b worth of shares in the CN¥2.9b company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 56% of Henan Qingshuiyuan TechnologyLtd shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 2 warning signs we've spotted with Henan Qingshuiyuan TechnologyLtd (including 1 which makes us a bit uncomfortable) .

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.