Zhejiang Tianyu Pharmaceutical Co., Ltd. (SZSE:300702) adds CN¥423m in market cap and insiders have a 56% stake in that gain

Key Insights

• Insiders appear to have a vested interest in Zhejiang Tianyu Pharmaceutical's growth, as seen by their sizeable ownership
• A total of 2 investors have a majority stake in the company with 55% ownership
• Institutions own 13% of Zhejiang Tianyu Pharmaceutical

To get a sense of who is truly in control of Zhejiang Tianyu Pharmaceutical Co., Ltd. (SZSE:300702), it is important to understand the ownership structure of the business. We can see that individual insiders own the lion's share in the company with 56% 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, insiders scored the highest last week as the company hit CN¥5.9b market cap following a 7.8% gain in the stock.

Let's take a closer look to see what the different types of shareholders can tell us about Zhejiang Tianyu Pharmaceutical.

View our latest analysis for Zhejiang Tianyu Pharmaceutical

What Does The Institutional Ownership Tell Us About Zhejiang Tianyu 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 Zhejiang Tianyu Pharmaceutical does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Zhejiang Tianyu Pharmaceutical, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Zhejiang Tianyu Pharmaceutical. Looking at our data, we can see that the largest shareholder is Jie Lin with 35% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 20% and 6.3%, of the shares outstanding, respectively. Yong Jun Tu, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

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 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Zhejiang Tianyu 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.

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 information suggests that insiders own more than half of Zhejiang Tianyu Pharmaceutical Co., Ltd.. This gives them effective control of the company. Given it has a market cap of CN¥5.9b, that means they have CN¥3.3b worth of shares. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 30% stake in Zhejiang Tianyu Pharmaceutical. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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 Zhejiang Tianyu Pharmaceutical 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.