Private companies are DRB-HICOM Berhad's (KLSE:DRBHCOM) biggest owners and were rewarded after market cap rose by RM155m last week

Key Insights

• Significant control over DRB-HICOM Berhad by private companies implies that the general public has more power to influence management and governance-related decisions
• 56% of the company is held by a single shareholder (Etika Strategi Sdn. Bhd.)
• 18% of DRB-HICOM Berhad is held by Institutions

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To get a sense of who is truly in control of DRB-HICOM Berhad (KLSE:DRBHCOM), it is important to understand the ownership structure of the business. We can see that private companies own the lion's share in the company with 57% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, private companies were the biggest beneficiaries of last week’s 11% gain.

Let's take a closer look to see what the different types of shareholders can tell us about DRB-HICOM Berhad.

See our latest analysis for DRB-HICOM Berhad

What Does The Institutional Ownership Tell Us About DRB-HICOM Berhad?

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.

As you can see, institutional investors have a fair amount of stake in DRB-HICOM Berhad. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at DRB-HICOM Berhad's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in DRB-HICOM Berhad. The company's largest shareholder is Etika Strategi Sdn. Bhd., with ownership of 56%. This implies that they have majority interest control of the future of the company. Meanwhile, the second and third largest shareholders, hold 7.3% and 3.7%, of the shares outstanding, respectively.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of DRB-HICOM Berhad

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.

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 DRB-HICOM Berhad. It has a market capitalization of just RM1.5b, and insiders have RM19m worth of shares, in their own names. 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 24% ownership, the general public, mostly comprising of individual investors, have some degree of sway over DRB-HICOM Berhad. 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.

Private Company Ownership

We can see that Private Companies own 57%, 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for DRB-HICOM Berhad 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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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.