Chengdu Zhimingda Electronics Co., Ltd.'s (SHSE:688636) market cap increased by CN¥518m, insiders receive a 46% cut

Key Insights

• Significant insider control over Chengdu Zhimingda Electronics implies vested interests in company growth
• A total of 5 investors have a majority stake in the company with 53% ownership
• Institutional ownership in Chengdu Zhimingda Electronics is 19%

To get a sense of who is truly in control of Chengdu Zhimingda Electronics Co., Ltd. (SHSE:688636), 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 46% 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¥3.6b market cap following a 17% gain in the stock.

Let's delve deeper into each type of owner of Chengdu Zhimingda Electronics, beginning with the chart below.

View our latest analysis for Chengdu Zhimingda Electronics

What Does The Institutional Ownership Tell Us About Chengdu Zhimingda Electronics?

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.

As you can see, institutional investors have a fair amount of stake in Chengdu Zhimingda Electronics. 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 Chengdu Zhimingda Electronics' earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Chengdu Zhimingda Electronics. Our data shows that Yong Wang is the largest shareholder with 34% of shares outstanding. With 5.7% and 5.3% of the shares outstanding respectively, Chengdu Zhiwei Enterprise Management Partnership Enterprise (Limited Partnership) and Jian Feng are the second and third largest shareholders.

On looking further, we found that 53% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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 Chengdu Zhimingda 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.

It seems insiders own a significant proportion of Chengdu Zhimingda Electronics Co., Ltd.. It has a market capitalization of just CN¥3.6b, and insiders have CN¥1.7b worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 30% 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

It seems that Private Companies own 5.7%, of the Chengdu Zhimingda Electronics stock. 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:

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 for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Chengdu Zhimingda Electronics , and understanding them should be part of your investment process.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.