Stock Analysis

Hong Seng Consolidated Berhad's (KLSE:HONGSENG) market cap up RM77m last week, benefiting both private companies who own 44% as well as insiders

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Key Insights

  • The considerable ownership by private companies in Hong Seng Consolidated Berhad indicates that they collectively have a greater say in management and business strategy
  • The top 6 shareholders own 52% of the company
  • Insiders own 20% of Hong Seng Consolidated Berhad

A look at the shareholders of Hong Seng Consolidated Berhad (KLSE:HONGSENG) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private companies with 44% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Private companies gained the most after market cap touched RM766m last week, while insiders who own 20% also benefitted.

Let's delve deeper into each type of owner of Hong Seng Consolidated Berhad, beginning with the chart below.

View our latest analysis for Hong Seng Consolidated Berhad

KLSE:HONGSENG Ownership Breakdown March 15th 2023

What Does The Institutional Ownership Tell Us About Hong Seng Consolidated 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.

As you can see, institutional investors have a fair amount of stake in Hong Seng Consolidated 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 Hong Seng Consolidated Berhad's earnings history below. Of course, the future is what really matters.

KLSE:HONGSENG Earnings and Revenue Growth March 15th 2023

Hedge funds don't have many shares in Hong Seng Consolidated Berhad. Looking at our data, we can see that the largest shareholder is Dalphon Limited with 12% of shares outstanding. In comparison, the second and third largest shareholders hold about 12% and 11% of the stock.

We did some more digging and found that 6 of the top shareholders account for roughly 52% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Hong Seng Consolidated Berhad

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

It seems insiders own a significant proportion of Hong Seng Consolidated Berhad. Insiders own RM156m worth of shares in the RM766m company. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 19% stake in Hong Seng Consolidated Berhad. 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

Our data indicates that Private Companies hold 44%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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 for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Hong Seng Consolidated Berhad , and understanding them should be part of your investment process.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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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Find out whether Hong Seng Consolidated Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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