Key Insights

• XTC New Energy Materials(Xiamen)Ltd's significant public companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• Xiamen Tungsten Co.,Ltd. owns 50% of the company
• Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

To get a sense of who is truly in control of XTC New Energy Materials(Xiamen) Co.,Ltd. (SHSE:688778), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 55% to be precise, is public companies. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, public companies benefitted the most after the company's market cap rose by CN¥711m last week.

In the chart below, we zoom in on the different ownership groups of XTC New Energy Materials(Xiamen)Ltd.

What Does The Institutional Ownership Tell Us About XTC New Energy Materials(Xiamen)Ltd?

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.

XTC New Energy Materials(Xiamen)Ltd 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. 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 XTC New Energy Materials(Xiamen)Ltd, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in XTC New Energy Materials(Xiamen)Ltd. Xiamen Tungsten Co.,Ltd. is currently the company's largest shareholder with 50% of shares outstanding. This implies that they have majority interest control of the future of the company. Fujian Yekong Equity Investment Management Co., Ltd. is the second largest shareholder owning 8.0% of common stock, and Ningbo Haicheng Lingzun Venture Capital Partnership Enterprise (Limited Partnership) holds about 7.3% of the company stock.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of XTC New Energy Materials(Xiamen)Ltd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 data cannot confirm that board members are holding shares personally. Given we are not picking up on insider ownership, we may have missing data. Therefore, it would be interesting to assess the CEO compensation and tenure, here.

General Public Ownership

With a 18% ownership, the general public, mostly comprising of individual investors, have some degree of sway over XTC New Energy Materials(Xiamen)Ltd. 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 Equity Ownership

Private equity firms hold a 8.0% stake in XTC New Energy Materials(Xiamen)Ltd. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

It seems that Private Companies own 8.4%, of the XTC New Energy Materials(Xiamen)Ltd stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Public Company Ownership

It appears to us that public companies own 55% of XTC New Energy Materials(Xiamen)Ltd. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Take risks for example - XTC New Energy Materials(Xiamen)Ltd has 3 warning signs we think you should be aware of.

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.