Private companies in ChengDu ShengNuo Biotec Co.,Ltd. (SHSE:688117) are its biggest bettors, and their bets paid off as stock gained 27% last week

Key Insights

• Significant control over ChengDu ShengNuo BiotecLtd by private companies implies that the general public has more power to influence management and governance-related decisions
• The top 4 shareholders own 51% of the company
• 22% of ChengDu ShengNuo BiotecLtd is held by Institutions

Every investor in ChengDu ShengNuo Biotec Co.,Ltd. (SHSE:688117) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private companies with 42% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, private companies collectively scored the highest last week as the company hit CN¥3.5b market cap following a 27% gain in the stock.

Let's take a closer look to see what the different types of shareholders can tell us about ChengDu ShengNuo BiotecLtd.

View our latest analysis for ChengDu ShengNuo BiotecLtd

What Does The Institutional Ownership Tell Us About ChengDu ShengNuo BiotecLtd?

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.

ChengDu ShengNuo BiotecLtd already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 ChengDu ShengNuo BiotecLtd's earnings history below. Of course, the future is what really matters.

ChengDu ShengNuo BiotecLtd is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Sichuan Sainuo Investment Co., Ltd. with 38% of shares outstanding. For context, the second largest shareholder holds about 5.5% of the shares outstanding, followed by an ownership of 4.6% by the third-largest shareholder.

On looking further, we found that 51% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of ChengDu ShengNuo BiotecLtd

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.

We can see that insiders own shares in ChengDu ShengNuo Biotec Co.,Ltd.. In their own names, insiders own CN¥78m worth of stock in the CN¥3.5b company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 29% 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 Company Ownership

We can see that Private Companies own 42%, of the shares on issue. 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.

Public Company Ownership

It appears to us that public companies own 5.5% of ChengDu ShengNuo BiotecLtd. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand ChengDu ShengNuo BiotecLtd better, we need to consider many other factors. For example, we've discovered 2 warning signs for ChengDu ShengNuo BiotecLtd that you should be aware of before investing here.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.