Private companies among Shenzhen Salubris Pharmaceuticals Co., Ltd.'s (SZSE:002294) largest stockholders and were hit after last week's 3.7% price drop

Key Insights

• Shenzhen Salubris Pharmaceuticals' significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• 58% of the company is held by a single shareholder (Salubris Pharmaceuticals Co., Ltd.)
• Institutions own 15% of Shenzhen Salubris Pharmaceuticals

To get a sense of who is truly in control of Shenzhen Salubris Pharmaceuticals Co., Ltd. (SZSE:002294), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are private companies with 60% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As market cap fell to CN¥38b last week, private companies would have faced the highest losses than any other shareholder groups of the company.

Let's delve deeper into each type of owner of Shenzhen Salubris Pharmaceuticals, beginning with the chart below.

See our latest analysis for Shenzhen Salubris Pharmaceuticals

What Does The Institutional Ownership Tell Us About Shenzhen Salubris Pharmaceuticals?

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.

We can see that Shenzhen Salubris Pharmaceuticals 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. 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 Shenzhen Salubris Pharmaceuticals' 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 Shenzhen Salubris Pharmaceuticals. Salubris Pharmaceuticals Co., Ltd. is currently the company's largest shareholder with 58% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. With 4.8% and 2.6% of the shares outstanding respectively, CITIC Securities Company Limited, Asset Management Arm and Shenzhen Salubris Pharmaceuticals Co., Ltd. , ESOP are the second and third largest shareholders.

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

Insider Ownership Of Shenzhen Salubris Pharmaceuticals

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 less than 1% of Shenzhen Salubris Pharmaceuticals Co., Ltd.. However, it's possible that insiders might have an indirect interest through a more complex structure. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around CN¥12m worth of shares (at current prices). Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 22% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

We can see that Private Companies own 60%, of the shares on issue. 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. For example, we've discovered 1 warning sign for Shenzhen Salubris Pharmaceuticals that you should be aware of before investing here.

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.