Sino-Entertainment Technology Holdings Limited's (HKG:6933) stock price dropped 19% last week; individual investors would not be happy

By
Simply Wall St
Published
March 15, 2022
SEHK:6933
Source: Shutterstock

To get a sense of who is truly in control of Sino-Entertainment Technology Holdings Limited (HKG:6933), it is important to understand the ownership structure of the business. We can see that individual investors own the lion's share in the company with 52% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While insiders who own 44% came under pressure after market cap dropped to HK$2.0b last week,individual investors took the most losses.

In the chart below, we zoom in on the different ownership groups of Sino-Entertainment Technology Holdings.

View our latest analysis for Sino-Entertainment Technology Holdings

ownership-breakdown
SEHK:6933 Ownership Breakdown March 15th 2022

What Does The Lack Of Institutional Ownership Tell Us About Sino-Entertainment Technology Holdings?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. Alternatively, there might be something about the company that has kept institutional investors away. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Sino-Entertainment Technology Holdings, for yourself, below.

earnings-and-revenue-growth
SEHK:6933 Earnings and Revenue Growth March 15th 2022

Sino-Entertainment Technology Holdings is not owned by hedge funds. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Sino-Entertainment Technology Holdings' case, its Top Key Executive, Jiaheng Sui, is the largest shareholder, holding 39% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 4.8% and 3.2%, of the shares outstanding, respectively.

Our studies suggest that the top 4 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.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Sino-Entertainment Technology Holdings

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

It seems insiders own a significant proportion of Sino-Entertainment Technology Holdings Limited. Insiders own HK$873m worth of shares in the HK$2.0b company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 52% of Sino-Entertainment Technology Holdings shares. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Company Ownership

It seems that Private Companies own 3.2%, of the Sino-Entertainment Technology Holdings stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the 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. For example, we've discovered 4 warning signs for Sino-Entertainment Technology Holdings (1 can't be ignored!) that you should be aware of before investing here.

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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