Private companies among China Wantian Holdings Limited's (HKG:1854) largest shareholders, saw gain in holdings value after stock jumped 12% last week

Key Insights

• Significant control over China Wantian Holdings by private companies implies that the general public has more power to influence management and governance-related decisions
• Ace Source Holdings Limited owns 54% of the company
• Insiders own 16% of China Wantian Holdings

If you want to know who really controls China Wantian Holdings Limited (HKG:1854), then you'll have to look at the makeup of its share registry. We can see that private companies own the lion's share in the company with 54% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Clearly, private companies benefitted the most after the company's market cap rose by HK$229m last week.

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

See our latest analysis for China Wantian Holdings

What Does The Lack Of Institutional Ownership Tell Us About China Wantian Holdings?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. China Wantian Holdings' earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

We note that hedge funds don't have a meaningful investment in China Wantian Holdings. The company's largest shareholder is Ace Source Holdings Limited, with ownership of 54%. This implies that they have majority interest control of the future of the company. For context, the second largest shareholder holds about 10% of the shares outstanding, followed by an ownership of 3.1% by the third-largest shareholder. Chi Ching Liu, who is the second-largest shareholder, also happens to hold the title of Senior Key Executive. In addition, we found that Xueyong Zhong, the CEO has 0.8% of the shares allocated to their name.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of China Wantian Holdings

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 information suggests that insiders maintain a significant holding in China Wantian Holdings Limited. Insiders own HK$348m worth of shares in the HK$2.2b company. 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

With a 30% ownership, the general public, mostly comprising of individual investors, have some degree of sway over China Wantian Holdings. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

Our data indicates that Private Companies hold 54%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for China Wantian Holdings (of which 1 makes us a bit uncomfortable!) you should know about.

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.

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

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.