China Zhenhua (Group) Science & Technology Co., Ltd's (SZSE:000733) market cap surged CN¥3.9b last week, individual investors who have a lot riding on the company were rewarded

Key Insights

• Significant control over China Zhenhua (Group) Science & Technology by individual investors implies that the general public has more power to influence management and governance-related decisions
• 50% of the business is held by the top 18 shareholders
• 22% of China Zhenhua (Group) Science & Technology is held by Institutions

Every investor in China Zhenhua (Group) Science & Technology Co., Ltd (SZSE:000733) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual investors with 47% 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, individual investors were the biggest beneficiaries of last week’s 22% gain.

Let's take a closer look to see what the different types of shareholders can tell us about China Zhenhua (Group) Science & Technology.

See our latest analysis for China Zhenhua (Group) Science & Technology

What Does The Institutional Ownership Tell Us About China Zhenhua (Group) Science & Technology?

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 China Zhenhua (Group) Science & Technology 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. 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 China Zhenhua (Group) Science & Technology, (below). Of course, keep in mind that there are other factors to consider, too.

China Zhenhua (Group) Science & Technology is not owned by hedge funds. China Electronics Corporation is currently the company's largest shareholder with 31% of shares outstanding. For context, the second largest shareholder holds about 2.3% of the shares outstanding, followed by an ownership of 2.2% by the third-largest shareholder.

After doing some more digging, we found that the top 18 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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 are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of China Zhenhua (Group) Science & Technology

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 data suggests that insiders own under 1% of China Zhenhua (Group) Science & Technology Co., Ltd in their own names. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around CN¥20m worth of shares (at current prices). It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

With a 47% ownership, the general public, mostly comprising of individual investors, have some degree of sway over China Zhenhua (Group) Science & Technology. 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 31%, of the China Zhenhua (Group) Science & Technology 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 1 warning sign we've spotted with China Zhenhua (Group) Science & Technology .

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.