Shiny Chemical Industrial Co., Ltd.'s (TWSE:1773) market cap dropped NT$2.8b last week; Private companies bore the brunt

Key Insights

• Shiny Chemical Industrial's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• 50% of the business is held by the top 4 shareholders
• Insiders own 10% of Shiny Chemical Industrial

Every investor in Shiny Chemical Industrial Co., Ltd. (TWSE:1773) should be aware of the most powerful shareholder groups. With 48% stake, private companies possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As market cap fell to NT$35b last week, private companies would have faced the highest losses than any other shareholder groups of the company.

Let's take a closer look to see what the different types of shareholders can tell us about Shiny Chemical Industrial.

Check out our latest analysis for Shiny Chemical Industrial

What Does The Institutional Ownership Tell Us About Shiny Chemical Industrial?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

Shiny Chemical Industrial already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Shiny Chemical Industrial, (below). Of course, keep in mind that there are other factors to consider, too.

Shiny Chemical Industrial is not owned by hedge funds. Ninghan Enterprise Co., Ltd. is currently the company's largest shareholder with 31% of shares outstanding. Yu Kuo Plywood Corp. is the second largest shareholder owning 12% of common stock, and Mingjing Investment Co., Ltd. holds about 3.6% of the company stock. Furthermore, CEO Chi-Fa Sun is the owner of 3.1% of the company's shares.

On looking further, we found that 50% 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.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Shiny Chemical Industrial

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.

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 Shiny Chemical Industrial Co., Ltd.. It is very interesting to see that insiders have a meaningful NT$3.6b stake in this NT$35b 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

With a 34% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Shiny Chemical Industrial. 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

We can see that Private Companies own 48%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Shiny Chemical Industrial better, we need to consider many other factors. For example, we've discovered 1 warning sign for Shiny Chemical Industrial that you should be aware of before investing here.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.