Could The Ping An Insurance (Group) Company of China, Ltd. (HKG:2318) Ownership Structure Tell Us Something Useful?

By
Simply Wall St
Published
September 30, 2020
SEHK:2318

Every investor in Ping An Insurance (Group) Company of China, Ltd. (HKG:2318) should be aware of the most powerful shareholder groups. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Companies that used to be publicly owned tend to have lower insider ownership.

With a market capitalization of HK$1.5t, Ping An Insurance (Group) Company of China is rather large. We'd expect to see institutional investors on the register. Companies of this size are usually well known to retail investors, too. Our analysis of the ownership of the company, below, shows that institutional investors have bought into the company. Let's delve deeper into each type of owner, to discover more about Ping An Insurance (Group) Company of China.

See our latest analysis for Ping An Insurance (Group) Company of China

ownership-breakdown
SEHK:2318 Ownership Breakdown October 1st 2020

What Does The Institutional Ownership Tell Us About Ping An Insurance (Group) Company of China?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

Ping An Insurance (Group) Company of China already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Ping An Insurance (Group) Company of China, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
SEHK:2318 Earnings and Revenue Growth October 1st 2020

We note that hedge funds don't have a meaningful investment in Ping An Insurance (Group) Company of China. Charoen Pokphand Group Co., Ltd. is currently the largest shareholder, with 8.8% of shares outstanding. Shenzhen Investment Holdings Co., Ltd. is the second largest shareholder owning 5.3% of common stock, and J.P. Morgan Asset Management, Inc. holds about 3.1% of the company stock.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant 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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Ping An Insurance (Group) Company of China

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own less than 1% of Ping An Insurance (Group) Company of China, Ltd.. However, it's possible that insiders might have an indirect interest through a more complex structure. As it is a large company, we'd only expect insiders to own a small percentage of it. But it's worth noting that they own HK$2.7b worth of shares. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are mostly retail investors, collectively hold 51% of Ping An Insurance (Group) Company of China shares. With this size of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to decline an acquisition or merger that may not improve profitability.

Private Company Ownership

Our data indicates that Private Companies hold 16%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Ping An Insurance (Group) Company of China better, we need to consider many other factors. Take risks for example - Ping An Insurance (Group) Company of China has 3 warning signs (and 1 which is potentially serious) we think you should know about.

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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This article by Simply Wall St is general in nature. 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.
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