Insiders of Zall Smart Commerce Group Ltd. (HKG:2098) Must Be Disappointed as Stock Fell 11% After Recent Purchases

Simply Wall St · Oct 11, 2023 19:05

Key Insights

Significant insider control over Zall Smart Commerce Group implies vested interests in company growth
70% of the company is held by a single shareholder (Zhi Yan)
Recent purchases by insiders

Every investor in Zall Smart Commerce Group Ltd. (HKG:2098) should be aware of the most powerful shareholder groups. With 71% stake, individual insiders possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

And looking at our data, we can see that insiders have bought shares recently. So the news of stock price falling by 11% is not something they might have been expecting soon after purchasing shares.

In the chart below, we zoom in on the different ownership groups of Zall Smart Commerce Group.

View our latest analysis for Zall Smart Commerce Group

ownership-breakdown — SEHK:2098 Ownership Breakdown October 11th 2023

What Does The Institutional Ownership Tell Us About Zall Smart Commerce Group?

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.

As you can see, institutional investors have a fair amount of stake in Zall Smart Commerce Group. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Zall Smart Commerce Group's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth — SEHK:2098 Earnings and Revenue Growth October 11th 2023

Hedge funds don't have many shares in Zall Smart Commerce Group. Looking at our data, we can see that the largest shareholder is the CEO Zhi Yan with 70% of shares outstanding. This essentially means that they have significant control over the outcome or future of the company, which is why insider ownership is usually looked upon favourably by prospective buyers. China Huarong Asset Management Co., Ltd., Asset Management Arm is the second largest shareholder owning 5.5% of common stock, and Gang Yu holds about 0.8% of the company stock. Interestingly, the third-largest shareholder, Gang Yu is also a Co-Chairman of the Board, again, indicating strong insider ownership amongst the company's top shareholders.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Zall Smart Commerce Group

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 the majority of Zall Smart Commerce Group Ltd.. This means they can collectively make decisions for the company. That means they own HK$2.6b worth of shares in the HK$3.6b company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

With a 23% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Zall Smart Commerce Group. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Zall Smart Commerce Group better, we need to consider many other factors. For instance, we've identified 2 warning signs for Zall Smart Commerce Group that you should be aware of.

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.