Could The Wealthking Investments Limited (HKG:1140) Ownership Structure Tell Us Something Useful?

By
Simply Wall St
Published
September 09, 2021
SEHK:1140
Source: Shutterstock

A look at the shareholders of Wealthking Investments Limited (HKG:1140) can tell us which group is most powerful. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.

Wealthking Investments is a smaller company with a market capitalization of HK$2.9b, so it may still be flying under the radar of many institutional investors. Taking a look at our data on the ownership groups (below), it seems that institutions are noticeable on the share registry. We can zoom in on the different ownership groups, to learn more about Wealthking Investments.

Check out our latest analysis for Wealthking Investments

ownership-breakdown
SEHK:1140 Ownership Breakdown September 9th 2021

What Does The Institutional Ownership Tell Us About Wealthking Investments?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have a fair amount of stake in Wealthking Investments. 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. 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 Wealthking Investments' historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
SEHK:1140 Earnings and Revenue Growth September 9th 2021

Wealthking Investments is not owned by hedge funds. From our data, we infer that the largest shareholder is Zhiwei Liu (who also holds the title of Top Key Executive) with 12% of shares outstanding. Its usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider play the role of a key stakeholder. Oriental Patron Financial Group is the second largest shareholder owning 10% of common stock, and Fortis Insurance Company (Asia) Limited, Asset Management Arm holds about 8.3% of the company stock.

We did some more digging and found that 6 of the top shareholders account for roughly 53% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Wealthking Investments

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.

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 information suggests that insiders maintain a significant holding in Wealthking Investments Limited. Insiders have a HK$1.1b stake in this HK$2.9b business. 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 holds a 33% stake in Wealthking Investments. 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

It seems that Private Companies own 15%, of the Wealthking Investments stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private 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. To that end, you should be aware of the 2 warning signs we've spotted with Wealthking Investments .

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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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