Insiders Were the Key Beneficiaries as Shenzhen Etmade Automatic Equipment Co., Ltd.'s (SZSE:300812) Market Cap Rises to CN¥3.1b

Simply Wall St ·  12/16/2022 06:35

If you want to know who really controls Shenzhen Etmade Automatic Equipment Co., Ltd. (SZSE:300812), then you'll have to look at the makeup of its share registry. With 48% stake, individual insiders possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Clearly, insiders benefitted the most after the company's market cap rose by CN¥907m last week.

In the chart below, we zoom in on the different ownership groups of Shenzhen Etmade Automatic Equipment.

Check out our latest analysis for Shenzhen Etmade Automatic Equipment

ownership-breakdownSZSE:300812 Ownership Breakdown December 15th 2022

What Does The Institutional Ownership Tell Us About Shenzhen Etmade Automatic Equipment?

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.

We can see that Shenzhen Etmade Automatic Equipment does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Shenzhen Etmade Automatic Equipment's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growthSZSE:300812 Earnings and Revenue Growth December 15th 2022

Shenzhen Etmade Automatic Equipment is not owned by hedge funds. Minghua Chai is currently the company's largest shareholder with 17% of shares outstanding. Junpeng Gao is the second largest shareholder owning 15% of common stock, and Jinglin Hu holds about 8.8% of the company stock. Interestingly, the bottom two of the top three shareholders also hold the title of Chief Executive Officer and Member of the Board of Directors, respectively, suggesting that these insiders have a personal stake in the company.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Shenzhen Etmade Automatic Equipment

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.

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 information suggests that insiders maintain a significant holding in Shenzhen Etmade Automatic Equipment Co., Ltd.. Insiders have a CN¥1.5b stake in this CN¥3.1b business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

With a 39% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Shenzhen Etmade Automatic Equipment. 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

It seems that Private Companies own 7.8%, of the Shenzhen Etmade Automatic Equipment stock. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Shenzhen Etmade Automatic Equipment has 4 warning signs (and 2 which are potentially serious) we think you should know about.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.

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