Xinxiang Richful Lube Additive Co.,Ltd.'s (SZSE:300910) largest shareholder, CEO Chunxuan Guo sees holdings value fall by 11% following recent drop

Key Insights

• Insiders appear to have a vested interest in Xinxiang Richful Lube AdditiveLtd's growth, as seen by their sizeable ownership
• 51% of the business is held by the top 2 shareholders
• 27% of Xinxiang Richful Lube AdditiveLtd is held by Institutions

To get a sense of who is truly in control of Xinxiang Richful Lube Additive Co.,Ltd. (SZSE:300910), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual insiders with 41% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As market cap fell to CN¥13b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

Let's take a closer look to see what the different types of shareholders can tell us about Xinxiang Richful Lube AdditiveLtd.

View our latest analysis for Xinxiang Richful Lube AdditiveLtd

What Does The Institutional Ownership Tell Us About Xinxiang Richful Lube AdditiveLtd?

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 Xinxiang Richful Lube AdditiveLtd does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Xinxiang Richful Lube AdditiveLtd, (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 Xinxiang Richful Lube AdditiveLtd. The company's CEO Chunxuan Guo is the largest shareholder with 37% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 14% and 4.2%, of the shares outstanding, respectively.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. 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 Xinxiang Richful Lube AdditiveLtd

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.

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 information suggests that insiders maintain a significant holding in Xinxiang Richful Lube Additive Co.,Ltd.. It is very interesting to see that insiders have a meaningful CN¥5.1b stake in this CN¥13b business. 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

The general public-- including retail investors -- own 18% stake in the company, and hence can't easily be ignored. 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 Equity Ownership

With a stake of 14%, private equity firms could influence the Xinxiang Richful Lube AdditiveLtd board. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Xinxiang Richful Lube AdditiveLtd better, we need to consider many other factors. Take risks for example - Xinxiang Richful Lube AdditiveLtd has 2 warning signs (and 1 which is a bit concerning) we think you should know about.

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.

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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.