China Qinfa Group Limited (HKG:866) adds HK$199m in market cap and insiders have a 56% stake in that gain

Key Insights

• China Qinfa Group's significant insider ownership suggests inherent interests in company's expansion
• Jihua Xu owns 50% of the company
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

If you want to know who really controls China Qinfa Group Limited (HKG:866), 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 individual insiders with 56% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, insiders benefitted the most after the company's market cap rose by HK$199m last week.

Let's delve deeper into each type of owner of China Qinfa Group, beginning with the chart below.

Check out our latest analysis for China Qinfa Group

What Does The Lack Of Institutional Ownership Tell Us About China Qinfa Group?

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. Alternatively, there might be something about the company that has kept institutional investors away. China Qinfa Group might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

China Qinfa Group is not owned by hedge funds. Jihua Xu is currently the largest shareholder, with 50% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Yangyuan Jintong Transportation Corp. Ltd. is the second largest shareholder owning 4.7% of common stock, and Da Xu holds about 3.7% of the company stock. Da Xu, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board. Furthermore, CEO Tao Bai is the owner of 2.0% of the company's shares.

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 China Qinfa Group

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 own more than half of China Qinfa Group Limited. This gives them effective control of the company. That means they own HK$959m worth of shares in the HK$1.7b company. That's quite meaningful. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 40% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 4.7%, of the China Qinfa Group stock. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 3 warning signs for China Qinfa Group you should be aware of.

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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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.