Yuexiu Real Estate Investment Trust's (HKG:405) market cap surged HK$400m last week, public companies who have a lot riding on the company were rewarded

Key Insights

• The considerable ownership by public companies in Yuexiu Real Estate Investment Trust indicates that they collectively have a greater say in management and business strategy
• A total of 3 investors have a majority stake in the company with 50% ownership
• Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

To get a sense of who is truly in control of Yuexiu Real Estate Investment Trust (HKG:405), it is important to understand the ownership structure of the business. We can see that public companies own the lion's share in the company with 44% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, public companies benefitted the most after the company's market cap rose by HK$400m last week.

In the chart below, we zoom in on the different ownership groups of Yuexiu Real Estate Investment Trust.

See our latest analysis for Yuexiu Real Estate Investment Trust

What Does The Institutional Ownership Tell Us About Yuexiu Real Estate Investment Trust?

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.

We can see that Yuexiu Real Estate Investment Trust does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Yuexiu Real Estate Investment Trust'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 Yuexiu Real Estate Investment Trust. Yuexiu Property Company Limited is currently the largest shareholder, with 44% of shares outstanding. In comparison, the second and third largest shareholders hold about 4.5% and 2.0% of the stock.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 50% stake.

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

Insider Ownership Of Yuexiu Real Estate Investment Trust

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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own less than 1% of Yuexiu Real Estate Investment Trust. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It has a market capitalization of just HK$4.7b, and the board has only HK$57k worth of shares in their own names. Many tend to prefer to see a board with bigger shareholdings. A good next step might be to take a look at this free summary of insider buying and selling.

General Public Ownership

With a 42% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Yuexiu Real Estate Investment Trust. 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

It seems that Private Companies own 9.7%, of the Yuexiu Real Estate Investment Trust stock. 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

We can see that public companies hold 44% of the Yuexiu Real Estate Investment Trust shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Yuexiu Real Estate Investment Trust better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Yuexiu Real Estate Investment Trust you should be aware of, and 1 of them is concerning.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.