Private companies invested in Yuexiu Transport Infrastructure Limited (HKG:1052) copped the brunt of last week's HK$418m market cap decline

Key Insights

• The considerable ownership by private companies in Yuexiu Transport Infrastructure indicates that they collectively have a greater say in management and business strategy
• 55% of the business is held by the top 2 shareholders
• Institutions own 14% of Yuexiu Transport Infrastructure

To get a sense of who is truly in control of Yuexiu Transport Infrastructure Limited (HKG:1052), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 55% to be precise, is private companies. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, private companies as a group endured the highest losses last week after market cap fell by HK$418m.

Let's delve deeper into each type of owner of Yuexiu Transport Infrastructure, beginning with the chart below.

See our latest analysis for Yuexiu Transport Infrastructure

What Does The Institutional Ownership Tell Us About Yuexiu Transport Infrastructure?

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.

Yuexiu Transport Infrastructure already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Yuexiu Transport Infrastructure, (below). Of course, keep in mind that there are other factors to consider, too.

Yuexiu Transport Infrastructure is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Guangzhou Yuexiu Holding Limited with 44% of shares outstanding. China Merchants Group Limited is the second largest shareholder owning 11% of common stock, and Zheshang Fund Management Co., Ltd. holds about 2.4% of the company stock.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 55% 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 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 Yuexiu Transport Infrastructure

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Our information suggests that Yuexiu Transport Infrastructure Limited insiders own under 1% of the company. But they may have an indirect interest through a corporate structure that we haven't picked up on. It has a market capitalization of just HK$6.7b, and the board has only HK$4.0m worth of shares in their own names. Many investors in smaller companies prefer to see the board more heavily invested. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 30% stake in Yuexiu Transport Infrastructure. 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 55%, of the Yuexiu Transport Infrastructure 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Yuexiu Transport Infrastructure better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Yuexiu Transport Infrastructure (at least 1 which is potentially serious) , and understanding them should be part of your investment process.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.