Why Genscript Biotech Corporation’s (HKG:1548) Ownership Structure Is Important

In this analysis, my focus will be on developing a perspective on Genscript Biotech Corporation’s (SEHK:1548) latest ownership structure, a less discussed, but important factor. When it comes to ownership structure of a company, the impact has been observed in both the long-and short-term performance of shares. If an activist institution invests the same amount of capital in a stock as a passive long-term pension fund, the implications are potentially different for key corporate financing decisions such as the use of excess cash or the source of financing. While these are more of a long-term investor’s concern, short-term investors may find the impact of institutional trading overwhelming enough to lose out on what could be a potential opportunity. Therefore, I will take a look at 1548’s shareholders in more detail.

See our latest analysis for Genscript Biotech
SEHK:1548 Ownership_summary Mar 14th 18
SEHK:1548 Ownership_summary Mar 14th 18

Institutional Ownership

Institutional investors are one of the largest group of market participants and their buy-sell decisions on a company’s stock can significantly impact prices, more so, when there are relatively small amounts of shares available on the market to trade. A low institutional ownership of 6.57% puts 1548 on a list of companies that are not likely exposed to spikes in volatility resulting from institutional trading.

General Public Ownership

A big stake of 42.37% in 1548 is held by the general public. With this size of ownership, retail investors can collectively play a role in major company policies that affect shareholders returns, including executive remuneration 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

Potential investors in 1548 should also look at another important group of investors: private companies, with a stake of 51.06%, who are primarily invested because of strategic and capital gain interests. An ownership of this size indicates a strong financial backing and has the potential to influence 1548’s business strategy. Thus, investors should dig deeper into 1548’s business relations with these companies and how it can affect shareholder returns in the long-term.

Next Steps:

Institutional ownership level and composition in 1548 is not high nor active enough to significantly impact its investment thesis. However, ownership structure should not be the only determining factor when you’re building an investment thesis for 1548. Instead, you should be evaluating company-specific factors such as the intrinsic valuation, which is a key driver of Genscript Biotech’s share price. I urge you to complete your research by taking a look at the following:

  • 1. Future Outlook: What are well-informed industry analysts predicting for 1548’s future growth? Take a look at our free research report of analyst consensus for 1548’s outlook.
  • 2. Financial Health: Is 1548’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  • 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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.