Key Insights

• China Zhonghua Geotechnical Engineering Group's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 48% of the business is held by the top 20 shareholders
• Insiders own 19% of China Zhonghua Geotechnical Engineering Group

To get a sense of who is truly in control of China Zhonghua Geotechnical Engineering Group Co., Ltd. (SZSE:002542), it is important to understand the ownership structure of the business. With 52% 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).

And following last week's 16% decline in share price, individual investors suffered the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about China Zhonghua Geotechnical Engineering Group.

What Does The Lack Of Institutional Ownership Tell Us About China Zhonghua Geotechnical Engineering Group?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of China Zhonghua Geotechnical Engineering Group, for yourself, below.

China Zhonghua Geotechnical Engineering Group is not owned by hedge funds. Chengdu Xingcheng Investment Group Co.Ltd. is currently the company's largest shareholder with 29% of shares outstanding. With 11% and 1.8% of the shares outstanding respectively, Yan Wei Wu and Zhongchi Liu are the second and third largest shareholders. Zhongchi Liu, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

Our studies suggest that the top 20 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 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. 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 China Zhonghua Geotechnical Engineering Group

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. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

It seems insiders own a significant proportion of China Zhonghua Geotechnical Engineering Group Co., Ltd.. It has a market capitalization of just CN¥2.8b, and insiders have CN¥529m 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 -- including retail investors -- own 52% of China Zhonghua Geotechnical Engineering Group. 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.

Private Company Ownership

We can see that Private Companies own 29%, of the shares on issue. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 2 warning signs for China Zhonghua Geotechnical Engineering Group you should be aware of.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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