Is Beijing Chunlizhengda Medical Instruments Co., Ltd.'s (HKG:1858) Shareholder Ownership Skewed Towards Insiders?

By
Simply Wall St
Published
November 18, 2021
SEHK:1858
Source: Shutterstock

A look at the shareholders of Beijing Chunlizhengda Medical Instruments Co., Ltd. (HKG:1858) can tell us which group is most powerful. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. 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.

Beijing Chunlizhengda Medical Instruments has a market capitalization of HK$7.3b, so we would expect some institutional investors to have noticed the stock. Our analysis of the ownership of the company, below, shows that institutions are noticeable on the share registry. Let's take a closer look to see what the different types of shareholders can tell us about Beijing Chunlizhengda Medical Instruments.

View our latest analysis for Beijing Chunlizhengda Medical Instruments

ownership-breakdown
SEHK:1858 Ownership Breakdown November 19th 2021

What Does The Institutional Ownership Tell Us About Beijing Chunlizhengda Medical Instruments?

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.

Beijing Chunlizhengda Medical Instruments 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. 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 Beijing Chunlizhengda Medical Instruments' earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
SEHK:1858 Earnings and Revenue Growth November 19th 2021

Hedge funds don't have many shares in Beijing Chunlizhengda Medical Instruments. Looking at our data, we can see that the largest shareholder is the CEO Chunbao Shi with 33% of shares outstanding. For context, the second largest shareholder holds about 28% of the shares outstanding, followed by an ownership of 5.7% by the third-largest shareholder. Interestingly, the second-largest shareholder, Shujun Yue is also Senior Key Executive, again, pointing towards 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.

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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Beijing Chunlizhengda Medical Instruments

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.

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 most recent data indicates that insiders own the majority of Beijing Chunlizhengda Medical Instruments Co., Ltd.. This means they can collectively make decisions for the company. That means they own HK$4.4b worth of shares in the HK$7.3b 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 21% 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 Equity Ownership

With an ownership of 5.7%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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.

Private Company Ownership

It seems that Private Companies own 3.3%, of the Beijing Chunlizhengda Medical Instruments 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. Be aware that Beijing Chunlizhengda Medical Instruments is showing 2 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...

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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