CEO Zhijiang Li, AK Medical Holdings Limited's (HKG:1789) largest shareholder sees value of holdings go down 11% after recent drop

By
Simply Wall St
Published
February 23, 2022
SEHK:1789
Source: Shutterstock

A look at the shareholders of AK Medical Holdings Limited (HKG:1789) can tell us which group is most powerful. The group holding the most number of shares in the company, around 52% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And last week, insiders endured the biggest losses as the stock fell by 11%.

Let's delve deeper into each type of owner of AK Medical Holdings, beginning with the chart below.

Check out our latest analysis for AK Medical Holdings

ownership-breakdown
SEHK:1789 Ownership Breakdown February 23rd 2022

What Does The Institutional Ownership Tell Us About AK Medical Holdings?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

AK Medical Holdings already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 AK Medical Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
SEHK:1789 Earnings and Revenue Growth February 23rd 2022

AK Medical Holdings is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO Zhijiang Li with 45% of shares outstanding. Hillhouse Investment Management, Ltd. is the second largest shareholder owning 6.8% of common stock, and Chaoyang Zhang holds about 5.3% of the company stock. Interestingly, the third-largest shareholder, Chaoyang Zhang is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of AK Medical Holdings

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

It seems that insiders own more than half the AK Medical Holdings Limited stock. This gives them a lot of power. So they have a HK$3.1b stake in this HK$5.9b business. 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

With a 23% ownership, the general public, mostly comprising of individual investors, have some degree of sway over AK Medical Holdings. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

Private equity firms hold a 6.8% stake in AK Medical Holdings. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

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 instance, we've identified 2 warning signs for AK Medical Holdings (1 is a bit unpleasant) that you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.

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