What Is The Ownership Structure Like For Jilin Province Huinan Changlong Bio-pharmacy Company Limited (HKG:8049)?

By
Simply Wall St
Published
September 23, 2020
SEHK:8049

A look at the shareholders of Jilin Province Huinan Changlong Bio-pharmacy Company Limited (HKG:8049) can tell us which group is most powerful. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.

Jilin Province Huinan Changlong Bio-pharmacy is not a large company by global standards. It has a market capitalization of HK$779m, which means it wouldn't have the attention of many institutional investors. Taking a look at our data on the ownership groups (below), it seems that institutions don't own shares in the company. We can zoom in on the different ownership groups, to learn more about Jilin Province Huinan Changlong Bio-pharmacy.

View our latest analysis for Jilin Province Huinan Changlong Bio-pharmacy

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SEHK:8049 Ownership Breakdown September 23rd 2020

What Does The Lack Of Institutional Ownership Tell Us About Jilin Province Huinan Changlong Bio-pharmacy?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. 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 Jilin Province Huinan Changlong Bio-pharmacy, for yourself, below.

earnings-and-revenue-growth
SEHK:8049 Earnings and Revenue Growth September 23rd 2020

Jilin Province Huinan Changlong Bio-pharmacy is not owned by hedge funds. The company's CEO Hong Zhang is the largest shareholder with 18% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 15% and 7.6%, of the shares outstanding, respectively. Interestingly, the third-largest shareholder, Xiao Guang Zhang is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

On studying our ownership data, we found that 7 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Jilin Province Huinan Changlong Bio-pharmacy

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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.

Our information suggests that insiders maintain a significant holding in Jilin Province Huinan Changlong Bio-pharmacy Company Limited. Insiders own HK$270m worth of shares in the HK$779m company. I 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 retail investors, hold a substantial 51% stake in Jilin Province Huinan Changlong Bio-pharmacy, suggesting it is a fairly popular stock. This level of ownership gives retail investors the power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Company Ownership

We can see that Private Companies own 15%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

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. Case in point: We've spotted 2 warning signs for Jilin Province Huinan Changlong Bio-pharmacy you should be aware of.

Of course this may not be the best stock to buy. So take a peek at this free 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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This article by Simply Wall St is general in nature. 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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