Royale Home Holdings Limited's (HKG:1198) 11% gain last week benefited both private companies who own 48% as well as insiders

Key Insights

• The considerable ownership by private companies in Royale Home Holdings indicates that they collectively have a greater say in management and business strategy
• A total of 2 investors have a majority stake in the company with 75% ownership
• Insiders own 27% of Royale Home Holdings

If you want to know who really controls Royale Home Holdings Limited (HKG:1198), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are private companies with 48% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Private companies gained the most after market cap touched HK$780m last week, while insiders who own 27% also benefitted.

Let's take a closer look to see what the different types of shareholders can tell us about Royale Home Holdings.

See our latest analysis for Royale Home Holdings

What Does The Lack Of Institutional Ownership Tell Us About Royale Home Holdings?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Royale Home Holdings, for yourself, below.

Royale Home Holdings is not owned by hedge funds. Guangzhou Hi-Tech Industry Development Zone Administration Committee is currently the largest shareholder, with 48% of shares outstanding. With 27% and 0.1% of the shares outstanding respectively, Kam-Pang Tse and Man Yiu Yue are the second and third largest shareholders. Note that the second and third-largest shareholders are also Top Key Executive and Member of the Board of Directors, respectively, meaning that the company's top shareholders are insiders.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Royale Home Holdings

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our information suggests that insiders maintain a significant holding in Royale Home Holdings Limited. It has a market capitalization of just HK$780m, and insiders have HK$214m worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 25% stake in the company, and hence can't easily be ignored. 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

We can see that Private Companies own 48%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Royale Home Holdings better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Royale Home Holdings .

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.