Press Metal Aluminium Holdings Berhad's (KLSE:PMETAL) stock price dropped 7.4% last week; private companies would not be happy

By
Simply Wall St
Published
March 16, 2022
KLSE:PMETAL
Source: Shutterstock

If you want to know who really controls Press Metal Aluminium Holdings Berhad (KLSE:PMETAL), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 35% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, private companies as a group endured the highest losses last week after market cap fell by RM4.1b.

Let's delve deeper into each type of owner of Press Metal Aluminium Holdings Berhad, beginning with the chart below.

See our latest analysis for Press Metal Aluminium Holdings Berhad

ownership-breakdown
KLSE:PMETAL Ownership Breakdown March 16th 2022

What Does The Institutional Ownership Tell Us About Press Metal Aluminium Holdings 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.

Press Metal Aluminium Holdings 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. 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 Press Metal Aluminium Holdings Berhad's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
KLSE:PMETAL Earnings and Revenue Growth March 16th 2022

Press Metal Aluminium Holdings Berhad is not owned by hedge funds. Alpha Milestone Sdn Bhd. is currently the largest shareholder, with 35% of shares outstanding. In comparison, the second and third largest shareholders hold about 8.0% and 6.0% of the stock. Note that the second and third-largest shareholders are also Senior Key Executive and Member of the Board of Directors, respectively, meaning that the company's top shareholders are insiders.

On looking further, we found that 52% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Press Metal Aluminium Holdings Berhad

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. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our information suggests that insiders maintain a significant holding in Press Metal Aluminium Holdings Berhad. It is very interesting to see that insiders have a meaningful RM13b stake in this RM51b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 26% stake in the company, and hence can't easily be ignored. 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 35%, of the company's shares. 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 Press Metal Aluminium Holdings Berhad better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Press Metal Aluminium Holdings Berhad you should be aware of.

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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