Key Insights

• Significant control over Foshan Haitian Flavouring and Food by private companies implies that the general public has more power to influence management and governance-related decisions
• 58% of the company is held by a single shareholder (Guangdong Haitian Group Co., Ltd.)
• 19% of Foshan Haitian Flavouring and Food is held by insiders

To get a sense of who is truly in control of Foshan Haitian Flavouring and Food Company Ltd. (SHSE:603288), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are private companies with 58% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And individual insiders on the other hand have a 19% ownership in the company. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones.

In the chart below, we zoom in on the different ownership groups of Foshan Haitian Flavouring and Food.

What Does The Institutional Ownership Tell Us About Foshan Haitian Flavouring and Food?

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 Foshan Haitian Flavouring and Food does have institutional investors; and they hold a good portion of the company's stock. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Foshan Haitian Flavouring and Food, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Foshan Haitian Flavouring and Food. Looking at our data, we can see that the largest shareholder is Guangdong Haitian Group Co., Ltd. with 58% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. For context, the second largest shareholder holds about 9.6% of the shares outstanding, followed by an ownership of 3.2% by the third-largest shareholder. Two of the top three shareholders happen to be Chief Executive Officer and Vice Chairman, respectively. That is, insiders feature higher up in the heirarchy of 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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Foshan Haitian Flavouring and Food

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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our information suggests that insiders maintain a significant holding in Foshan Haitian Flavouring and Food Company Ltd.. It is very interesting to see that insiders have a meaningful CN¥42b stake in this CN¥224b business. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

With a 17% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Foshan Haitian Flavouring and Food. 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

Our data indicates that Private Companies hold 58%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Foshan Haitian Flavouring and Food , and understanding them should be part of your investment process.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.