Beijing Tongrentang Co., Ltd's (SHSE:600085) largest shareholders are private companies who were rewarded as market cap surged CN¥5.7b last week

Key Insights

• The considerable ownership by private companies in Beijing Tongrentang indicates that they collectively have a greater say in management and business strategy
• 52% of the company is held by a single shareholder (China Beijing Tong Ren Tang Group Co. Ltd.)
• 18% of Beijing Tongrentang is held by Institutions

To get a sense of who is truly in control of Beijing Tongrentang Co., Ltd (SHSE:600085), it is important to understand the ownership structure of the business. We can see that private companies own the lion's share in the company with 53% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Clearly, private companies benefitted the most after the company's market cap rose by CN¥5.7b last week.

In the chart below, we zoom in on the different ownership groups of Beijing Tongrentang.

See our latest analysis for Beijing Tongrentang

What Does The Institutional Ownership Tell Us About Beijing Tongrentang?

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.

Beijing Tongrentang 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 Beijing Tongrentang's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Beijing Tongrentang. The company's largest shareholder is China Beijing Tong Ren Tang Group Co. Ltd., with ownership of 52%. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Meanwhile, the second and third largest shareholders, hold 3.5% and 3.0%, of the shares outstanding, respectively.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Beijing Tongrentang

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

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, who are usually individual investors, hold a 29% stake in Beijing Tongrentang. 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 53%, of the Beijing Tongrentang stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Beijing Tongrentang better, we need to consider many other factors. Be aware that Beijing Tongrentang is showing 2 warning signs in our investment analysis , and 1 of those is potentially serious...

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.