Institutions profited after CSPC Pharmaceutical Group Limited's (HKG:1093) market cap rose HK$8.0b last week but individual investors profited the most

Key Insights

• The considerable ownership by individual investors in CSPC Pharmaceutical Group indicates that they collectively have a greater say in management and business strategy
• The top 11 shareholders own 50% of the company
• Insiders have been selling lately

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To get a sense of who is truly in control of CSPC Pharmaceutical Group Limited (HKG:1093), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual investors with 40% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While individual investors were the group that benefitted the most from last week’s HK$8.0b market cap gain, institutions too had a 29% share in those profits.

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

Check out our latest analysis for CSPC Pharmaceutical Group

What Does The Institutional Ownership Tell Us About CSPC Pharmaceutical Group?

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.

As you can see, institutional investors have a fair amount of stake in CSPC Pharmaceutical Group. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at CSPC Pharmaceutical Group's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in CSPC Pharmaceutical Group. From our data, we infer that the largest shareholder is Dongchen Cai (who also holds the title of Top Key Executive) with 24% of shares outstanding. Its usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider play the role of a key stakeholder. Common Success International Limited is the second largest shareholder owning 6.4% of common stock, and BlackRock, Inc. holds about 4.6% of the company stock.

After doing some more digging, we found that the top 11 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of CSPC Pharmaceutical Group

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.

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.

It seems insiders own a significant proportion of CSPC Pharmaceutical Group Limited. Insiders own HK$31b worth of shares in the HK$125b 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 40% stake in the company, and hence can't easily be ignored. 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

Our data indicates that Private Companies hold 6.6%, 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that CSPC Pharmaceutical Group is showing 1 warning sign in our investment analysis , 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. 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.