Despite recent sales, Zhixin Group Holding Limited (HKG:2187) insiders own 73% shares but recent downturn may have set them back

By
Simply Wall St
Published
November 18, 2021
SEHK:2187
Source: Shutterstock

A look at the shareholders of Zhixin Group Holding Limited (HKG:2187) can tell us which group is most powerful. With 73% stake, individual insiders possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And our data suggests that insiders own the top position in the company’s share registry despite recent sales. As market cap fell to HK$1.4b last week, they would have faced the highest losses than any other shareholder groups of the company.

Let's delve deeper into each type of owner of Zhixin Group Holding, beginning with the chart below.

See our latest analysis for Zhixin Group Holding

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SEHK:2187 Ownership Breakdown November 18th 2021

What Does The Institutional Ownership Tell Us About Zhixin Group Holding?

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.

Since institutions own only a small portion of Zhixin Group Holding, 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. So if the company itself can improve over time, we may well see more institutional buyers in the future. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

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SEHK:2187 Earnings and Revenue Growth November 18th 2021

Hedge funds don't have many shares in Zhixin Group Holding. Our data suggests that Zhijie Ye, who is also the company's Top Key Executive, holds the most number of shares at 49%. When an insider holds a sizeable amount of a company's stock, investors consider it as a positive sign because it suggests that insiders are willing to have their wealth tied up in the future of the company. With 16% and 8.5% of the shares outstanding respectively, Wengui Huang and Chen Manhong are the second and third largest shareholders. Interestingly, the second-largest shareholder, Wengui Huang is also Chief Executive Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Zhixin Group Holding

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.

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 own more than half of Zhixin Group Holding Limited. This gives them effective control of the company. That means they own HK$1.1b worth of shares in the HK$1.4b 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, who are usually individual investors, hold a 22% stake in Zhixin Group Holding. 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Take risks for example - Zhixin Group Holding has 4 warning signs (and 2 which make us uncomfortable) we think you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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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