Private companies who hold 43% of Charmacy Pharmaceutical Co., Ltd. (HKG:2289) gained 12%, insiders profited as well

Key Insights

• The considerable ownership by private companies in Charmacy Pharmaceutical indicates that they collectively have a greater say in management and business strategy
• A total of 2 investors have a majority stake in the company with 75% ownership
• Insiders own 32% of Charmacy Pharmaceutical

To get a sense of who is truly in control of Charmacy Pharmaceutical Co., Ltd. (HKG:2289), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are private companies with 43% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While private companies were the group that benefitted the most from last week’s HK$145m market cap gain, insiders too had a 32% share in those profits.

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

See our latest analysis for Charmacy Pharmaceutical

What Does The Institutional Ownership Tell Us About Charmacy Pharmaceutical?

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.

Since institutions own only a small portion of Charmacy Pharmaceutical, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. We sometimes see a rising share price when a few big institutions want to buy a certain stock at the same time. The history of earnings and revenue, which you can see below, could be helpful in considering if more institutional investors will want the stock. Of course, there are plenty of other factors to consider, too.

Charmacy Pharmaceutical is not owned by hedge funds. Our data shows that Jiangyao Group Co., Ltd. is the largest shareholder with 43% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 32% and 5.0%, of the shares outstanding, respectively. Chuanglong Yao, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 75% stake.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Charmacy Pharmaceutical

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 information suggests that insiders maintain a significant holding in Charmacy Pharmaceutical Co., Ltd.. Insiders own HK$442m worth of shares in the HK$1.4b company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

With a 19% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Charmacy Pharmaceutical. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

We can see that Private Companies own 43%, of the shares on issue. 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 Charmacy Pharmaceutical better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Charmacy Pharmaceutical (at least 1 which is concerning) , and understanding them should be part of your investment process.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.