Key Insights

• Significant control over China YuHua Education by private companies implies that the general public has more power to influence management and governance-related decisions
• Nai Hai Trust owns 53% of the company
• 14% of China YuHua Education is held by Institutions

To get a sense of who is truly in control of China YuHua Education Corporation Limited (HKG:6169), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 53% to be precise, is private companies. 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 HK$1.8b last week, private companies would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of China YuHua Education.

Check out our latest analysis for China YuHua Education

What Does The Institutional Ownership Tell Us About China YuHua Education?

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 China YuHua Education. 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. 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 China YuHua Education's historic earnings and revenue below, but keep in mind there's always more to the story.

China YuHua Education is not owned by hedge funds. The company's largest shareholder is Nai Hai Trust, with ownership of 53%. This implies that they have majority interest control of the future of the company. In comparison, the second and third largest shareholders hold about 7.8% and 3.8% of the stock. Furthermore, CEO Hua Li is the owner of 0.7% of the company's shares.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of China YuHua Education

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

We can report that insiders do own shares in China YuHua Education Corporation Limited. As individuals, the insiders collectively own HK$23m worth of the HK$1.8b company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 32% stake in China YuHua Education. 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

Our data indicates that Private Companies hold 53%, of the company's shares. 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Take risks for example - China YuHua Education has 2 warning signs we think 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.