Stock Analysis

Private companies are Sunway Berhad's (KLSE:SUNWAY) biggest owners and were rewarded after market cap rose by RM1.2b last week

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KLSE:SUNWAY
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Key Insights

  • Significant control over Sunway 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 (Sungei Way Corporation Sdn Bhd)
  • Institutions own 15% of Sunway Berhad

A look at the shareholders of Sunway Berhad (KLSE:SUNWAY) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private companies with 57% ownership. 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 collectively scored the highest last week as the company hit RM11b market cap following a 3.2% gain in the stock.

In the chart below, we zoom in on the different ownership groups of Sunway Berhad.

See our latest analysis for Sunway Berhad

ownership-breakdown
KLSE:SUNWAY Ownership Breakdown December 10th 2023

What Does The Institutional Ownership Tell Us About Sunway Berhad?

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.

Sunway Berhad 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 Sunway Berhad, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
KLSE:SUNWAY Earnings and Revenue Growth December 10th 2023

Hedge funds don't have many shares in Sunway Berhad. Sungei Way Corporation Sdn Bhd is currently the company's largest shareholder with 56% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Fook Ling Cheah is the second largest shareholder owning 5.5% of common stock, and Employees Provident Fund of Malaysia holds about 4.8% of the company stock. Fook Ling Cheah, who is the second-largest shareholder, also happens to hold the title of Top Key Executive.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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 Sunway Berhad

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 Sunway Berhad. The insiders have a meaningful stake worth RM621m. Most would see this as a real positive. If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 16% stake in Sunway Berhad. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

Our data indicates that Private Companies hold 57%, of the company's shares. 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:

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. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Sunway Berhad (at least 1 which shouldn't be ignored) , and understanding them should be part of your investment process.

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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