Key Insights

• The considerable ownership by individual investors in Lianhe Chemical TechnologyLtd indicates that they collectively have a greater say in management and business strategy
• 46% of the business is held by the top 25 shareholders
• Insiders own 30% of Lianhe Chemical TechnologyLtd

Every investor in Lianhe Chemical Technology Co.,Ltd. (SZSE:002250) should be aware of the most powerful shareholder groups. With 53% stake, individual investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 8.1% decrease in the stock price last week, individual investors suffered the most losses, but insiders who own 30% stock also took a hit.

Let's delve deeper into each type of owner of Lianhe Chemical TechnologyLtd, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Lianhe Chemical TechnologyLtd?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

As you can see, institutional investors have a fair amount of stake in Lianhe Chemical TechnologyLtd. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Lianhe Chemical TechnologyLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

Lianhe Chemical TechnologyLtd is not owned by hedge funds. The company's largest shareholder is Jinxiang Mou, with ownership of 25%. AEGON-Industrial Fund Management Co. Ltd. is the second largest shareholder owning 4.0% of common stock, and Youzhi Zhang holds about 2.4% of the company stock.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant 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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Lianhe Chemical TechnologyLtd

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

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 most recent data indicates that insiders own a reasonable proportion of Lianhe Chemical Technology Co.,Ltd.. It has a market capitalization of just CN¥4.4b, and insiders have CN¥1.3b 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, who are usually individual investors, hold a substantial 53% stake in Lianhe Chemical TechnologyLtd, suggesting it is a fairly popular stock. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 1 warning sign for Lianhe Chemical TechnologyLtd that you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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