Here's What China Xinhua Education Group Limited's (HKG:2779) Shareholder Ownership Structure Looks Like

By
Simply Wall St
Published
March 15, 2022
SEHK:2779
Source: Shutterstock

The big shareholder groups in China Xinhua Education Group Limited (HKG:2779) have power over the company. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Warren Buffett said that he likes "a business with enduring competitive advantages that is run by able and owner-oriented people." So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.

China Xinhua Education Group is not a large company by global standards. It has a market capitalization of HK$1.8b, which means it wouldn't have the attention of many institutional investors. Our analysis of the ownership of the company, below, shows that institutional investors have not yet purchased much of the company. We can zoom in on the different ownership groups, to learn more about China Xinhua Education Group.

Check out our latest analysis for China Xinhua Education Group

ownership-breakdown
SEHK:2779 Ownership Breakdown March 15th 2022

What Does The Institutional Ownership Tell Us About China Xinhua Education Group?

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.

Institutions have a very small stake in China Xinhua Education Group. That indicates that the company is on the radar of some funds, but it isn't particularly popular with professional investors at the moment. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. We sometimes see a rising share price when a few big institutions want to buy a certain stock at the same time. The history of earnings and revenue, which you can see below, could be helpful in considering if more institutional investors will want the stock. Of course, there are plenty of other factors to consider, too.

earnings-and-revenue-growth
SEHK:2779 Earnings and Revenue Growth March 15th 2022

Hedge funds don't have many shares in China Xinhua Education Group. Our data shows that Junbao Wu is the largest shareholder with 72% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. In comparison, the second and third largest shareholders hold about 0.9% and 0.5% of the stock.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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 Xinhua Education Group

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.

It seems that insiders own more than half the China Xinhua Education Group Limited stock. This gives them a lot of power. So they have a HK$1.3b stake in this HK$1.8b business. 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 27% stake in China Xinhua Education Group. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

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

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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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