Retail investors are Shenzhen Gongjin Electronics Co., Ltd.'s (SHSE:603118) biggest owners and were hit after market cap dropped CN¥929m

Key Insights

• Significant control over Shenzhen Gongjin Electronics by retail investors implies that the general public has more power to influence management and governance-related decisions
• A total of 25 investors have a majority stake in the company with 48% ownership
• Insider ownership in Shenzhen Gongjin Electronics is 42%

To get a sense of who is truly in control of Shenzhen Gongjin Electronics Co., Ltd. (SHSE:603118), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 52% to be precise, is retail investors. Put another way, the group faces the maximum upside potential (or downside risk).

While the holdings of retail investors took a hit after last week’s 11% price drop, insiders with their 42% also suffered.

In the chart below, we zoom in on the different ownership groups of Shenzhen Gongjin Electronics.

View our latest analysis for Shenzhen Gongjin Electronics

What Does The Institutional Ownership Tell Us About Shenzhen Gongjin Electronics?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Shenzhen Gongjin Electronics already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Shenzhen Gongjin Electronics' earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Shenzhen Gongjin Electronics. Our data shows that Fo Nan Tang is the largest shareholder with 21% of shares outstanding. For context, the second largest shareholder holds about 20% of the shares outstanding, followed by an ownership of 1.3% by the third-largest shareholder.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Shenzhen Gongjin Electronics

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.

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.

Our most recent data indicates that insiders own a reasonable proportion of Shenzhen Gongjin Electronics Co., Ltd.. It has a market capitalization of just CN¥7.3b, and insiders have CN¥3.0b worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 52% of Shenzhen Gongjin Electronics shares. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

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. Be aware that Shenzhen Gongjin Electronics is showing 2 warning signs in our investment analysis , and 1 of those can't be ignored...

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.