Individual investors are E-House (China) Enterprise Holdings Limited's (HKG:2048) biggest owners and were rewarded after market cap rose by HK$227m last week

By
Simply Wall St
Published
March 17, 2022
SEHK:2048
Source: Shutterstock

To get a sense of who is truly in control of E-House (China) Enterprise Holdings Limited (HKG:2048), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 38% to be precise, is individual investors. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, individual investors collectively scored the highest last week as the company hit HK$2.1b market cap following a 12% gain in the stock.

Let's delve deeper into each type of owner of E-House (China) Enterprise Holdings, beginning with the chart below.

Check out our latest analysis for E-House (China) Enterprise Holdings

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SEHK:2048 Ownership Breakdown March 17th 2022

What Does The Institutional Ownership Tell Us About E-House (China) Enterprise Holdings?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Since institutions own only a small portion of E-House (China) Enterprise Holdings, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

earnings-and-revenue-growth
SEHK:2048 Earnings and Revenue Growth March 17th 2022

Hedge funds don't have many shares in E-House (China) Enterprise Holdings. Alibaba Group Holding Limited is currently the largest shareholder, with 14% of shares outstanding. In comparison, the second and third largest shareholders hold about 13% and 9.8% of the stock.

On looking further, we found that 56% 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 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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of E-House (China) Enterprise Holdings

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

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.

Our most recent data indicates that insiders own some shares in E-House (China) Enterprise Holdings Limited. In their own names, insiders own HK$200m worth of stock in the HK$2.1b company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 38% ownership, the general public, mostly comprising of individual investors, have some degree of sway over E-House (China) Enterprise Holdings. 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 23%, 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.

Public Company Ownership

It appears to us that public companies own 28% of E-House (China) Enterprise Holdings. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

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. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for E-House (China) Enterprise Holdings (of which 1 is concerning!) you should know about.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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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