Key Insights

• Significant control over Guangdong Guanghua Sci-Tech by individual investors implies that the general public has more power to influence management and governance-related decisions
• 51% of the business is held by the top 6 shareholders
• Insider ownership in Guangdong Guanghua Sci-Tech is 44%

To get a sense of who is truly in control of Guangdong Guanghua Sci-Tech Co., Ltd. (SZSE:002741), it is important to understand the ownership structure of the business. We can see that individual investors own the lion's share in the company with 47% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While individual investors were the group that reaped the most benefits after last week's 6.4% price gain, insiders also received a 44% cut.

Let's take a closer look to see what the different types of shareholders can tell us about Guangdong Guanghua Sci-Tech.

Check out our latest analysis for Guangdong Guanghua Sci-Tech

What Does The Institutional Ownership Tell Us About Guangdong Guanghua Sci-Tech?

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.

Institutions have a very small stake in Guangdong Guanghua Sci-Tech. That indicates that the company is on the radar of some funds, but it isn't particularly popular with professional investors at the moment. So if the company itself can improve over time, we may well see more institutional buyers in the future. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

Hedge funds don't have many shares in Guangdong Guanghua Sci-Tech. Chuang Fa Zheng is currently the largest shareholder, with 26% of shares outstanding. The second and third largest shareholders are Ren Zheng and Han Zhao Chen, with an equal amount of shares to their name at 6.2%. Note that the second and third-largest shareholders are also Chief Executive Officer and Chairman of the Board, respectively, meaning that the company's top shareholders are insiders.

On further inspection, we found that more than half the company's shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Guangdong Guanghua Sci-Tech

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

Our information suggests that insiders maintain a significant holding in Guangdong Guanghua Sci-Tech Co., Ltd.. Insiders own CN¥2.7b worth of shares in the CN¥6.2b company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 47% stake in Guangdong Guanghua Sci-Tech. 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 4.3%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Guangdong Guanghua Sci-Tech better, we need to consider many other factors.

Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.