Key Insights

• The considerable ownership by public companies in Huabao Flavours & Fragrances indicates that they collectively have a greater say in management and business strategy
• Huabao International Holdings Limited owns 81% of the company
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

A look at the shareholders of Huabao Flavours & Fragrances Co., Ltd. (SZSE:300741) can tell us which group is most powerful. We can see that public companies own the lion's share in the company with 81% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And last week, public companies endured the biggest losses as the stock fell by 4.3%.

Let's take a closer look to see what the different types of shareholders can tell us about Huabao Flavours & Fragrances.

What Does The Institutional Ownership Tell Us About Huabao Flavours & Fragrances?

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.

Huabao Flavours & Fragrances 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. 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 Huabao Flavours & Fragrances, (below). Of course, keep in mind that there are other factors to consider, too.

Huabao Flavours & Fragrances is not owned by hedge funds. Huabao International Holdings Limited is currently the company's largest shareholder with 81% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. For context, the second largest shareholder holds about 3.4% of the shares outstanding, followed by an ownership of 0.2% by the third-largest shareholder.

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 Huabao Flavours & Fragrances

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 Huabao Flavours & Fragrances Co., Ltd. in their own names. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own CN¥54k worth of shares. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 13% stake in Huabao Flavours & Fragrances. 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.

Public Company Ownership

We can see that public companies hold 81% of the Huabao Flavours & Fragrances shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Huabao Flavours & Fragrances better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Huabao Flavours & Fragrances (of which 2 are a bit unpleasant!) 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.

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