While insiders own 40% of Shanghai Chicmax Cosmetic Co., Ltd. (HKG:2145), employee share scheme are its largest shareholders with 42% ownership

Key Insights

• The considerable ownership by employee share scheme in Shanghai Chicmax Cosmetic indicates that they collectively have a greater say in management and business strategy
• The top 2 shareholders own 83% of the company
• Insider ownership in Shanghai Chicmax Cosmetic is 40%

To get a sense of who is truly in control of Shanghai Chicmax Cosmetic Co., Ltd. (HKG:2145), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are employee share scheme with 42% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Individual insiders, on the other hand, account for 40% of the company's stockholders. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders.

In the chart below, we zoom in on the different ownership groups of Shanghai Chicmax Cosmetic.

View our latest analysis for Shanghai Chicmax Cosmetic

What Does The Lack Of Institutional Ownership Tell Us About Shanghai Chicmax Cosmetic?

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 are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Shanghai Chicmax Cosmetic's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

Shanghai Chicmax Cosmetic is not owned by hedge funds. Shanghai Chicmax Cosmetic Co., Ltd, ESOP is currently the company's largest shareholder with 42% of shares outstanding. For context, the second largest shareholder holds about 40% of the shares outstanding, followed by an ownership of 0.05% by the third-largest shareholder. Yixiong Lyu, 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 83% stake.

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 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 Shanghai Chicmax Cosmetic

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 information suggests that insiders maintain a significant holding in Shanghai Chicmax Cosmetic Co., Ltd.. Insiders own HK$7.7b worth of shares in the HK$19b company. That's quite meaningful. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 17% 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Shanghai Chicmax Cosmetic better, we need to consider many other factors.

Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.