Key Insights

• Significant control over Guangdong Guanghua Sci-Tech by individual investors implies that the general public has more power to influence management and governance-related decisions
• A total of 6 investors have a majority stake in the company with 52% ownership
• Insider ownership in Guangdong Guanghua Sci-Tech is 44%

To get a sense of who is truly in control of Guangdong Guanghua Sci-Tech Co., Ltd. (SZSE:002741), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual investors with 45% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders who own 44% came under pressure after market cap dropped to CN¥5.9b last week,individual investors took the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about Guangdong Guanghua Sci-Tech.

View our latest analysis for Guangdong Guanghua Sci-Tech

What Does The Institutional Ownership Tell Us About Guangdong Guanghua Sci-Tech?

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 Guangdong Guanghua Sci-Tech does have institutional investors; and they hold a good portion of the company's stock. 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 Guangdong Guanghua Sci-Tech's historic earnings and revenue below, but keep in mind there's always more to the story.

Guangdong Guanghua Sci-Tech is not owned by hedge funds. Chuang Fa Zheng is currently the company's largest shareholder with 26% of shares outstanding. The second and third largest shareholders are Ren Zheng and Han Chen, with an equal amount of shares to their name at 6.2%. Note that the second and third-largest shareholders are also Chief Executive Officer and Chairman of the Board, respectively, meaning that the company's top shareholders are insiders.

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. 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 Guangdong Guanghua Sci-Tech

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. 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.

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 most recent data indicates that insiders own a reasonable proportion of Guangdong Guanghua Sci-Tech Co., Ltd.. It has a market capitalization of just CN¥5.9b, and insiders have CN¥2.6b worth of shares in their own names. 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

The general public, who are usually individual investors, hold a 45% stake in Guangdong Guanghua Sci-Tech. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 4.3%, of the Guangdong Guanghua Sci-Tech 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Guangdong Guanghua Sci-Tech better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Guangdong Guanghua Sci-Tech you should be aware of.

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.