China Express Airlines Co.,LTD's (SZSE:002928) last week's 6.4% decline must have disappointed private companies who have a significant stake

Key Insights

• Significant control over China Express AirlinesLTD by private companies implies that the general public has more power to influence management and governance-related decisions
• 51% of the business is held by the top 5 shareholders
• Institutional ownership in China Express AirlinesLTD is 18%

To get a sense of who is truly in control of China Express Airlines Co.,LTD (SZSE:002928), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 50% to be precise, is private companies. 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 6.4% decline in share price, private companies suffered the most losses.

In the chart below, we zoom in on the different ownership groups of China Express AirlinesLTD.

See our latest analysis for China Express AirlinesLTD

What Does The Institutional Ownership Tell Us About China Express AirlinesLTD?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

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

Hedge funds don't have many shares in China Express AirlinesLTD. Looking at our data, we can see that the largest shareholder is China Express Airlines Holding (Shenzhen) Co., Ltd. with 23% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 11% and 6.3%, of the shares outstanding, respectively.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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 China Express AirlinesLTD

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 cannot confirm that board members are holding shares personally. It is unusual not to have at least some personal holdings by board members, so our data might be flawed. A good next step would be to check how much the CEO is paid.

General Public Ownership

With a 32% ownership, the general public, mostly comprising of individual investors, have some degree of sway over China Express AirlinesLTD. 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 50%, of the China Express AirlinesLTD stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand China Express AirlinesLTD better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with China Express AirlinesLTD , and understanding them should be part of your investment process.

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.