Key Insights

• Significant control over Youcare Pharmaceutical Group by private companies implies that the general public has more power to influence management and governance-related decisions
• The top 4 shareholders own 52% of the company
• Institutions own 27% of Youcare Pharmaceutical Group

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To get a sense of who is truly in control of Youcare Pharmaceutical Group Co., Ltd. (SHSE:688658), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are private companies with 43% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions who own 27% came under pressure after market cap dropped to CN¥5.7b last week,private companies took the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about Youcare Pharmaceutical Group.

What Does The Institutional Ownership Tell Us About Youcare Pharmaceutical Group?

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 Youcare Pharmaceutical Group. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Youcare Pharmaceutical Group's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Youcare Pharmaceutical Group. The company's largest shareholder is Fuyang Jingyue Yongshun Information Consulting Co., Ltd., with ownership of 41%. Meanwhile, the second and third largest shareholders, hold 4.5% and 3.6%, of the shares outstanding, respectively. Fei Yu, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

Our research also brought to light the fact that roughly 52% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Youcare Pharmaceutical Group

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.

We can see that insiders own shares in Youcare Pharmaceutical Group Co., Ltd.. It has a market capitalization of just CN¥5.7b, and insiders have CN¥208m 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

The general public-- including retail investors -- own 25% stake in the company, and hence can't easily be ignored. 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

Our data indicates that Private Companies hold 43%, 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 1 warning sign for Youcare Pharmaceutical Group that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.