Shaanxi Kanghui Pharmaceutical Co., Ltd.'s (SHSE:603139) stock price dropped 10% last week; private companies would not be happy

Key Insights

• Shaanxi Kanghui Pharmaceutical's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 2 shareholders own 52% of the company
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

Every investor in Shaanxi Kanghui Pharmaceutical Co., Ltd. (SHSE:603139) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 52% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to CN¥1.3b last week, private companies would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of Shaanxi Kanghui Pharmaceutical.

See our latest analysis for Shaanxi Kanghui Pharmaceutical

What Does The Institutional Ownership Tell Us About Shaanxi Kanghui Pharmaceutical?

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.

Less than 5% of Shaanxi Kanghui Pharmaceutical is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

We note that hedge funds don't have a meaningful investment in Shaanxi Kanghui Pharmaceutical. The company's largest shareholder is Shaanxi Kanghui Holding Co., Ltd., with ownership of 37%. TBP Traditional Medicine Investment Holdings (H.K.) Limited is the second largest shareholder owning 15% of common stock, and Yan Lin Wang holds about 6.7% of the company stock.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 52% stake.

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

Insider Ownership Of Shaanxi Kanghui Pharmaceutical

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 see that insiders own shares in Shaanxi Kanghui Pharmaceutical Co., Ltd.. It has a market capitalization of just CN¥1.3b, and insiders have CN¥85m worth of shares, in their own names. This shows at least some alignment, but we usually like to see larger insider holdings. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 39% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Shaanxi Kanghui Pharmaceutical. 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

It seems that Private Companies own 52%, of the Shaanxi Kanghui Pharmaceutical 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Shaanxi Kanghui Pharmaceutical has 3 warning signs (and 2 which are potentially serious) we think you should know about.

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.