Insiders are the top stockholders in DongHua Testing Technology Co. , Ltd. (SZSE:300354), and the recent 7.9% drop might have disappointed them

Key Insights

• Significant insider control over DongHua Testing Technology implies vested interests in company growth
• 57% of the business is held by the top 2 shareholders
• 23% of DongHua Testing Technology is held by Institutions

To get a sense of who is truly in control of DongHua Testing Technology Co. , Ltd. (SZSE:300354), it is important to understand the ownership structure of the business. With 55% stake, individual insiders possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And following last week's 7.9% decline in share price, insiders suffered the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about DongHua Testing Technology.

View our latest analysis for DongHua Testing Technology

What Does The Institutional Ownership Tell Us About DongHua Testing Technology?

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.

We can see that DongHua Testing 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. 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 DongHua Testing Technology's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in DongHua Testing Technology. Shigang Liu is currently the company's largest shareholder with 49% of shares outstanding. Bank of Communications Schroder Fund Management Co., Ltd. is the second largest shareholder owning 8.1% of common stock, and Mian Luo holds about 5.0% of the company stock.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 57% stake.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of DongHua Testing 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. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 that insiders own more than half the DongHua Testing Technology Co. , Ltd. stock. This gives them a lot of power. Given it has a market cap of CN¥4.6b, that means they have CN¥2.5b worth of shares. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 22% 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand DongHua Testing Technology better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for DongHua Testing Technology you should know about.

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.

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