Stock Analysis

With 53% institutional ownership, China Mengniu Dairy Company Limited (HKG:2319) is a favorite amongst the big guns

SEHK:2319
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Key Insights

  • Given the large stake in the stock by institutions, China Mengniu Dairy's stock price might be vulnerable to their trading decisions
  • A total of 5 investors have a majority stake in the company with 51% ownership
  • Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

A look at the shareholders of China Mengniu Dairy Company Limited (HKG:2319) can tell us which group is most powerful. With 53% stake, institutions possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Given the vast amount of money and research capacities at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait.

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

Check out our latest analysis for China Mengniu Dairy

ownership-breakdown
SEHK:2319 Ownership Breakdown June 25th 2024

What Does The Institutional Ownership Tell Us About China Mengniu Dairy?

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 Mengniu Dairy already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at China Mengniu Dairy's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
SEHK:2319 Earnings and Revenue Growth June 25th 2024

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. China Mengniu Dairy is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is COFCO Corporation with 24% of shares outstanding. First Sentier Investors (Australia) IM Ltd is the second largest shareholder owning 8.0% of common stock, and Fidelity International Ltd holds about 7.0% of the company stock.

On looking further, we found that 51% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of China Mengniu Dairy

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.

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 data suggests that insiders own under 1% of China Mengniu Dairy Company Limited in their own names. However, it's possible that insiders might have an indirect interest through a more complex structure. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own HK$75m worth of shares. Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 22% stake in China Mengniu Dairy. 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 24%, of the China Mengniu Dairy 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:

It's always worth thinking about the different groups who own shares in a company. But to understand China Mengniu Dairy better, we need to consider many other factors. For example, we've discovered 2 warning signs for China Mengniu Dairy that you should be aware of before investing here.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.

Valuation is complex, but we're helping make it simple.

Find out whether China Mengniu Dairy is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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.

Valuation is complex, but we're helping make it simple.

Find out whether China Mengniu Dairy is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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