Key Insights

• Zhongshan Public Utilities GroupLtd's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• 57% of the business is held by the top 2 shareholders
• Institutional ownership in Zhongshan Public Utilities GroupLtd is 13%

If you want to know who really controls Zhongshan Public Utilities Group Co.,Ltd (SZSE:000685), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are private companies with 51% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Clearly, private companies benefitted the most after the company's market cap rose by CN¥440m last week.

In the chart below, we zoom in on the different ownership groups of Zhongshan Public Utilities GroupLtd.

What Does The Institutional Ownership Tell Us About Zhongshan Public Utilities GroupLtd?

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.

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

Hedge funds don't have many shares in Zhongshan Public Utilities GroupLtd. The company's largest shareholder is Zhongshan Investment Holding Group Co., Ltd., with ownership of 49%. For context, the second largest shareholder holds about 8.1% of the shares outstanding, followed by an ownership of 1.8% by the third-largest shareholder.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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 Zhongshan Public Utilities GroupLtd

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 data suggests that insiders own under 1% of Zhongshan Public Utilities Group Co.,Ltd in their own names. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. Keep in mind that it's a big company, and the insiders own CN¥116m worth of shares. The absolute value might be more important than the proportional share. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 35% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Zhongshan Public Utilities GroupLtd. 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

Our data indicates that Private Companies hold 51%, of the company's shares. 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 Zhongshan Public Utilities GroupLtd better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Zhongshan Public Utilities GroupLtd (of which 1 doesn't sit too well with us!) you should know about.

Of course this may not be the best stock to buy. So take a peek at this free 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.