Individual investors are China Ruyi Holdings Limited's (HKG:136) biggest owners and were hit after market cap dropped HK$1.3b

By
Simply Wall St
Published
April 21, 2022
SEHK:136
Source: Shutterstock

To get a sense of who is truly in control of China Ruyi Holdings Limited (HKG:136), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual investors with 45% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 6.8% decrease in the stock price last week, individual investors suffered the most losses, but insiders who own 31% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of China Ruyi Holdings.

Check out our latest analysis for China Ruyi Holdings

ownership-breakdown
SEHK:136 Ownership Breakdown April 21st 2022

What Does The Institutional Ownership Tell Us About China Ruyi Holdings?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Institutions have a very small stake in China Ruyi Holdings. That indicates that the company is on the radar of some funds, but it isn't particularly popular with professional investors at the moment. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

earnings-and-revenue-growth
SEHK:136 Earnings and Revenue Growth April 21st 2022

We note that hedge funds don't have a meaningful investment in China Ruyi Holdings. From our data, we infer that the largest shareholder is Liming Ke (who also holds the title of Top Key Executive) with 20% of shares outstanding. Its usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider play the role of a key stakeholder. For context, the second largest shareholder holds about 20% of the shares outstanding, followed by an ownership of 11% by the third-largest shareholder.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of China Ruyi Holdings

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.

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.

It seems insiders own a significant proportion of China Ruyi Holdings Limited. It is very interesting to see that insiders have a meaningful HK$5.6b stake in this HK$18b 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

With a 45% ownership, the general public, mostly comprising of individual investors, have some degree of sway over China Ruyi Holdings. 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.

Public Company Ownership

Public companies currently own 20% of China Ruyi Holdings stock. 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. Case in point: We've spotted 2 warning signs for China Ruyi Holdings you should be aware of, and 1 of them doesn't sit too well with us.

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.

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