Insiders of Sino Biopharmaceutical Limited (HKG:1177) were rewarded after last week’s 4.5% gain

A look at the shareholders of Sino Biopharmaceutical Limited (HKG:1177) can tell us which group is most powerful. The group holding the most number of shares in the company, around 36% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

A quick look at our data suggests that insiders have been buying shares in the company recently and their bets paid off last week after the stock gained 4.5%.

In the chart below, we zoom in on the different ownership groups of Sino Biopharmaceutical.

View our latest analysis for Sino Biopharmaceutical

What Does The Institutional Ownership Tell Us About Sino Biopharmaceutical?

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.

Sino Biopharmaceutical already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Sino Biopharmaceutical's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Sino Biopharmaceutical. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Sino Biopharmaceutical's case, its Senior Key Executive, Eric S. Y. Tse, is the largest shareholder, holding 22% of shares outstanding. With 12% and 8.6% of the shares outstanding respectively, France Investment (China 1) Group Limited and Ping Tse are the second and third largest shareholders. Interestingly, the third-largest shareholder, Ping Tse is also a Vice Chairman, again, indicating strong insider ownership amongst the company's top shareholders.

On looking further, we found that 52% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Sino Biopharmaceutical

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. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 Biopharmaceutical Limited. It is very interesting to see that insiders have a meaningful HK$39b stake in this HK$109b business. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public, who are usually individual investors, hold a 33% stake in Sino Biopharmaceutical. 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.

Private Company Ownership

Our data indicates that Private Companies hold 12%, of the company's shares. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Sino Biopharmaceutical better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Sino Biopharmaceutical (of which 1 doesn't sit too well with us!) 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.

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.

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