Chengdu Kanghong Pharmaceutical Group Co., Ltd (SZSE:002773) insiders have significant skin in the game with 39% ownership

Key Insights

• Insiders appear to have a vested interest in Chengdu Kanghong Pharmaceutical Group's growth, as seen by their sizeable ownership
• The top 2 shareholders own 54% of the company
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

A look at the shareholders of Chengdu Kanghong Pharmaceutical Group Co., Ltd (SZSE:002773) can tell us which group is most powerful. The group holding the most number of shares in the company, around 39% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

With such a notable stake in the company, insiders would be highly incentivised to make value accretive decisions.

In the chart below, we zoom in on the different ownership groups of Chengdu Kanghong Pharmaceutical Group.

View our latest analysis for Chengdu Kanghong Pharmaceutical Group

What Does The Institutional Ownership Tell Us About Chengdu Kanghong Pharmaceutical Group?

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 Chengdu Kanghong Pharmaceutical Group 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 Chengdu Kanghong Pharmaceutical Group's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Chengdu Kanghong Pharmaceutical Group. Looking at our data, we can see that the largest shareholder is Chengdu Kanghong Technology (Group) Co., Ltd. with 32% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 23% and 8.7%, of the shares outstanding, respectively. Xiao Ke, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Chengdu Kanghong Pharmaceutical Group

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

It seems insiders own a significant proportion of Chengdu Kanghong Pharmaceutical Group Co., Ltd. It is very interesting to see that insiders have a meaningful CN¥6.9b stake in this CN¥18b business. 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

The general public-- including retail investors -- own 23% 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

Our data indicates that Private Companies hold 32%, of the company's shares. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for Chengdu Kanghong Pharmaceutical Group you should be aware of.

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.