Key Insights

• Significant control over Guangshen Railway by individual investors implies that the general public has more power to influence management and governance-related decisions
• A total of 10 investors have a majority stake in the company with 51% ownership
• Institutional ownership in Guangshen Railway is 21%

To get a sense of who is truly in control of Guangshen Railway Company Limited (HKG:525), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 38% to be precise, is individual investors. 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$19b last week, individual investors would have faced the highest losses than any other shareholder groups of the company.

Let's delve deeper into each type of owner of Guangshen Railway, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Guangshen Railway?

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.

Guangshen Railway already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Guangshen Railway's historic earnings and revenue below, but keep in mind there's always more to the story.

Guangshen Railway is not owned by hedge funds. The company's largest shareholder is Guangzhou-Zhuhai Railway Company Limited, with ownership of 37%. For context, the second largest shareholder holds about 2.2% of the shares outstanding, followed by an ownership of 1.8% by the third-largest shareholder.

On further inspection, we found that more than half the company's shares are owned by the top 10 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Guangshen Railway

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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.

Shareholders would probably be interested to learn that insiders own shares in Guangshen Railway Company Limited. This is a big company, so it is good to see this level of alignment. Insiders own HK$669m worth of shares (at current prices). If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

With a 38% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Guangshen Railway. 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

We can see that Private Companies own 38%, of the shares on issue. 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 Guangshen Railway better, we need to consider many other factors. Be aware that Guangshen Railway is showing 1 warning sign in our investment analysis , you should know about...

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.