Private companies invested in Beijing Huafeng Test & Control Technology Co.,Ltd. (SHSE:688200) copped the brunt of last week's CN¥907m market cap decline

Key Insights

• The considerable ownership by private companies in Beijing Huafeng Test & Control TechnologyLtd indicates that they collectively have a greater say in management and business strategy
• 50% of the business is held by the top 4 shareholders
• Institutional ownership in Beijing Huafeng Test & Control TechnologyLtd is 23%

If you want to know who really controls Beijing Huafeng Test & Control Technology Co.,Ltd. (SHSE:688200), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 42% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to CN¥12b last week, private companies would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of Beijing Huafeng Test & Control TechnologyLtd.

See our latest analysis for Beijing Huafeng Test & Control TechnologyLtd

What Does The Institutional Ownership Tell Us About Beijing Huafeng Test & Control TechnologyLtd?

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 Beijing Huafeng Test & Control TechnologyLtd does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Beijing Huafeng Test & Control TechnologyLtd's earnings history below. Of course, the future is what really matters.

Beijing Huafeng Test & Control TechnologyLtd is not owned by hedge funds. Our data shows that Tianjin Xinhua Investment Holding Co., Ltd. is the largest shareholder with 27% of shares outstanding. China Aerospace Science and Technology Corporation is the second largest shareholder owning 15% of common stock, and China Reform Venture Capital Investment Management (Shenzhen) Ltd. holds about 5.0% of the company stock.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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

Insider Ownership Of Beijing Huafeng Test & Control TechnologyLtd

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own some shares in Beijing Huafeng Test & Control Technology Co.,Ltd.. The insiders have a meaningful stake worth CN¥497m. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 30% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 42%, of the Beijing Huafeng Test & Control TechnologyLtd 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. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Beijing Huafeng Test & Control TechnologyLtd you should know about.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com