While individual investors own 31% of Jiangsu Nhwa Pharmaceutical Co., LTD (SZSE:002262), private companies are its largest shareholders with 32% ownership

Key Insights

• Significant control over Jiangsu Nhwa Pharmaceutical by private companies implies that the general public has more power to influence management and governance-related decisions
• A total of 6 investors have a majority stake in the company with 51% ownership
• Insiders own 18% of Jiangsu Nhwa Pharmaceutical

Every investor in Jiangsu Nhwa Pharmaceutical Co., LTD (SZSE:002262) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private companies with 32% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And individual investors on the other hand have a 31% ownership in the company.

In the chart below, we zoom in on the different ownership groups of Jiangsu Nhwa Pharmaceutical.

See our latest analysis for Jiangsu Nhwa Pharmaceutical

What Does The Institutional Ownership Tell Us About Jiangsu Nhwa Pharmaceutical?

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 Jiangsu Nhwa Pharmaceutical does have institutional investors; and they hold a good portion of the company's stock. 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 Jiangsu Nhwa Pharmaceutical's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Jiangsu Nhwa Pharmaceutical. Looking at our data, we can see that the largest shareholder is Xuzhou Nhwa Investment Co., Ltd. with 32% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 4.9% and 4.0%, of the shares outstanding, respectively. Zengliang Chen, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

On further inspection, we found that more than half the company's shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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 Jiangsu Nhwa Pharmaceutical

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 Jiangsu Nhwa Pharmaceutical Co., LTD. Insiders own CN¥4.7b worth of shares in the CN¥27b company. That's quite meaningful. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 31% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Jiangsu Nhwa Pharmaceutical. 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 32%, of the Jiangsu Nhwa Pharmaceutical 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too.

I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.