With 84% ownership, Nongfu Spring Co., Ltd. (HKG:9633) insiders have a lot at stake

By
Simply Wall St
Published
December 24, 2021
SEHK:9633
Source: Shutterstock

If you want to know who really controls Nongfu Spring Co., Ltd. (HKG:9633), 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 84% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

So it follows, every decision made by insiders of Nongfu Spring regarding the company's future would be crucial to them.

Let's delve deeper into each type of owner of Nongfu Spring, beginning with the chart below.

See our latest analysis for Nongfu Spring

ownership-breakdown
SEHK:9633 Ownership Breakdown December 24th 2021

What Does The Lack Of Institutional Ownership Tell Us About Nongfu Spring?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. Alternatively, there might be something about the company that has kept institutional investors away. Nongfu Spring might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

earnings-and-revenue-growth
SEHK:9633 Earnings and Revenue Growth December 24th 2021

Hedge funds don't have many shares in Nongfu Spring. With a 84% stake, CEO Shanshan Zhong is the largest shareholder. This implies that they possess majority interests and have significant control over the company. Investors usually consider it a good sign when the company leadership has such a significant stake, as this is widely perceived to increase the chance that the management will act in the best interests of the company. For context, the second largest shareholder holds about 0.3% of the shares outstanding, followed by an ownership of 0.2% by the third-largest shareholder.

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 Nongfu Spring

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own the majority of Nongfu Spring Co., Ltd.. This means they can collectively make decisions for the company. Given it has a market cap of HK$562b, that means insiders have a whopping HK$475b 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-- including retail investors -- own 15% stake in the company, and hence can't easily be ignored. 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. For example, we've discovered 1 warning sign for Nongfu Spring that you should be aware of before investing here.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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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