Insiders were the key beneficiaries as DongHua Testing Technology Co. , Ltd.'s (SZSE:300354) market cap rises to CN¥5.3b

Key Insights

• DongHua Testing Technology's significant insider ownership suggests inherent interests in company's expansion
• A total of 2 investors have a majority stake in the company with 55% ownership
• Institutional ownership in DongHua Testing Technology is 15%

If you want to know who really controls DongHua Testing Technology Co. , Ltd. (SZSE:300354), then you'll have to look at the makeup of its share registry. With 54% 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.

As a result, insiders were the biggest beneficiaries of last week’s 9.0% gain.

In the chart below, we zoom in on the different ownership groups of DongHua Testing Technology.

Check out our latest analysis for DongHua Testing Technology

What Does The Institutional Ownership Tell Us About DongHua Testing 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 DongHua Testing Technology 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. 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 DongHua Testing Technology, (below). Of course, keep in mind that there are other factors to consider, too.

DongHua Testing Technology is not owned by hedge funds. Shigang Liu is currently the company's largest shareholder with 49% of shares outstanding. For context, the second largest shareholder holds about 5.4% of the shares outstanding, followed by an ownership of 5.0% by the third-largest shareholder.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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 a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

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. 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.

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 information suggests that insiders own more than half of DongHua Testing Technology Co. , Ltd.. This gives them effective control of the company. Given it has a market cap of CN¥5.3b, that means they have CN¥2.9b worth of shares. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 31% stake in DongHua Testing Technology. 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.

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.

I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.

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.