Retail investors are Fujian Nanwang Environment Protection Scien-Tech Co.,Ltd's (SZSE:301355) biggest owners and were hit after market cap dropped CN¥375m

Key Insights

• Significant control over Fujian Nanwang Environment Protection Scien-TechLtd by retail investors implies that the general public has more power to influence management and governance-related decisions
• 51% of the business is held by the top 9 shareholders
• 18% of Fujian Nanwang Environment Protection Scien-TechLtd is held by insiders

To get a sense of who is truly in control of Fujian Nanwang Environment Protection Scien-Tech Co.,Ltd (SZSE:301355), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 45% to be precise, is retail investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, retail investors as a group endured the highest losses last week after market cap fell by CN¥375m.

In the chart below, we zoom in on the different ownership groups of Fujian Nanwang Environment Protection Scien-TechLtd.

View our latest analysis for Fujian Nanwang Environment Protection Scien-TechLtd

What Does The Institutional Ownership Tell Us About Fujian Nanwang Environment Protection Scien-TechLtd?

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.

As you can see, institutional investors have a fair amount of stake in Fujian Nanwang Environment Protection Scien-TechLtd. 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 Fujian Nanwang Environment Protection Scien-TechLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Fujian Nanwang Environment Protection Scien-TechLtd. Looking at our data, we can see that the largest shareholder is the CEO Kaisheng Chen with 18% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 11% and 5.6%, of the shares outstanding, respectively.

We also observed that the top 9 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.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Fujian Nanwang Environment Protection Scien-TechLtd

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 Fujian Nanwang Environment Protection Scien-Tech Co.,Ltd. It has a market capitalization of just CN¥2.4b, and insiders have CN¥431m worth of shares in their own names. 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, who are usually individual investors, hold a 45% stake in Fujian Nanwang Environment Protection Scien-TechLtd. 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 Company Ownership

It seems that Private Companies own 30%, of the Fujian Nanwang Environment Protection Scien-TechLtd stock. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 3 warning signs for Fujian Nanwang Environment Protection Scien-TechLtd (1 is significant!) that you should be aware of before investing here.

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.