Individual investors account for 55% of Chongqing Rural Commercial Bank Co., Ltd.'s (HKG:3618) ownership, while private companies account for 27%

By
Simply Wall St
Published
May 13, 2022
SEHK:3618
Source: Shutterstock

A look at the shareholders of Chongqing Rural Commercial Bank Co., Ltd. (HKG:3618) can tell us which group is most powerful. The group holding the most number of shares in the company, around 55% to be precise, is individual investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Meanwhile, private companies make up 27% of the company’s shareholders.

Let's take a closer look to see what the different types of shareholders can tell us about Chongqing Rural Commercial Bank.

See our latest analysis for Chongqing Rural Commercial Bank

ownership-breakdown
SEHK:3618 Ownership Breakdown May 13th 2022

What Does The Institutional Ownership Tell Us About Chongqing Rural Commercial Bank?

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.

Chongqing Rural Commercial Bank 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Chongqing Rural Commercial Bank's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
SEHK:3618 Earnings and Revenue Growth May 13th 2022

Chongqing Rural Commercial Bank is not owned by hedge funds. The company's largest shareholder is Chongqing Yufu Capital Operation Group Co., Ltd., with ownership of 8.7%. Chongqing City Construction Investment (Group) Co., Ltd. is the second largest shareholder owning 7.0% of common stock, and Chongqing Development Property Management Co., Ltd. holds about 5.2% of the company stock.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Chongqing Rural Commercial Bank

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 most recent data indicates that insiders own less than 1% of Chongqing Rural Commercial Bank Co., Ltd.. But they may have an indirect interest through a corporate structure that we haven't picked up on. 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 HK$32m worth of shares (at current prices). Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 55% of Chongqing Rural Commercial Bank shares. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Equity Ownership

With a stake of 8.7%, private equity firms could influence the Chongqing Rural Commercial Bank board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

We can see that Private Companies own 27%, of the shares on issue. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

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.

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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