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China Education Group Holdings Limited's (HKG:839) market cap increased by HK$392m, insiders receive a 63% cut
Key Insights
- Insiders appear to have a vested interest in China Education Group Holdings' growth, as seen by their sizeable ownership
- 63% of the business is held by the top 2 shareholders
- 12% of China Education Group Holdings is held by Institutions
To get a sense of who is truly in control of China Education Group Holdings Limited (HKG:839), it is important to understand the ownership structure of the business. We can see that individual insiders own the lion's share in the company with 63% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Clearly, insiders benefitted the most after the company's market cap rose by HK$392m last week.
Let's take a closer look to see what the different types of shareholders can tell us about China Education Group Holdings.
See our latest analysis for China Education Group Holdings
What Does The Institutional Ownership Tell Us About China Education Group Holdings?
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.
China Education Group Holdings already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of China Education Group Holdings, (below). Of course, keep in mind that there are other factors to consider, too.
We note that hedge funds don't have a meaningful investment in China Education Group Holdings. Guo Yu is currently the largest shareholder, with 31% of shares outstanding. In comparison, the second and third largest shareholders hold about 31% and 1.6% of the stock.
To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of China Education Group Holdings
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. 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 own more than half of China Education Group Holdings Limited. This gives them effective control of the company. Given it has a market cap of HK$9.3b, that means insiders have a whopping HK$5.9b worth of shares in their own names. It is good to see this level of investment. You can check here to see if those insiders have been selling any of their shares.
General Public Ownership
The general public, who are usually individual investors, hold a 25% stake in China Education Group Holdings. 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.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with China Education Group Holdings , and understanding them should be part of your investment process.
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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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.
About SEHK:839
China Education Group Holdings
An investment holding company, engages in the operation of private higher and secondary vocational education institutions in Mainland China and Australia.
Adequate balance sheet with moderate growth potential.
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