Key Insights

• Significant control over ZHEJIANG DIBAY ELECTRICLtd by private companies implies that the general public has more power to influence management and governance-related decisions
• 50% of the company is held by a single shareholder (Dibay Holdings Co., Ltd.)
• Insider ownership in ZHEJIANG DIBAY ELECTRICLtd is 18%

To get a sense of who is truly in control of ZHEJIANG DIBAY ELECTRIC CO.,Ltd. (SHSE:603320), it is important to understand the ownership structure of the business. We can see that private companies own the lion's share in the company with 50% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, private companies as a group endured the highest losses last week after market cap fell by CN¥427m.

Let's take a closer look to see what the different types of shareholders can tell us about ZHEJIANG DIBAY ELECTRICLtd.

What Does The Institutional Ownership Tell Us About ZHEJIANG DIBAY ELECTRICLtd?

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 ZHEJIANG DIBAY ELECTRICLtd. 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. 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 ZHEJIANG DIBAY ELECTRICLtd, (below). Of course, keep in mind that there are other factors to consider, too.

ZHEJIANG DIBAY ELECTRICLtd is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Dibay Holdings Co., Ltd. with 50% of shares outstanding. This implies that they have majority interest control of the future of the company. In comparison, the second and third largest shareholders hold about 16% and 1.4% of the stock. Jianrong Wu, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of ZHEJIANG DIBAY ELECTRICLtd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 ZHEJIANG DIBAY ELECTRIC CO.,Ltd.. It has a market capitalization of just CN¥1.8b, and insiders have CN¥316m 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-- including retail investors -- own 26% stake in the company, and hence can't easily be ignored. 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

We can see that Private Companies own 50%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand ZHEJIANG DIBAY ELECTRICLtd better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with ZHEJIANG DIBAY ELECTRICLtd (at least 1 which can't be ignored) , and understanding them should be part of your investment process.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com