Key Insights

• The considerable ownership by private companies in Dongfang Electric indicates that they collectively have a greater say in management and business strategy
• 56% of the company is held by a single shareholder (DongFang Electric Corporation)
• Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

A look at the shareholders of Dongfang Electric Corporation Limited (HKG:1072) can tell us which group is most powerful. The group holding the most number of shares in the company, around 56% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

Individual investors, on the other hand, account for 34% of the company's stockholders.

Let's take a closer look to see what the different types of shareholders can tell us about Dongfang Electric.

What Does The Institutional Ownership Tell Us About Dongfang Electric?

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.

We can see that Dongfang Electric does have institutional investors; and they hold a good portion of the company's stock. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Dongfang Electric's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Dongfang Electric. Looking at our data, we can see that the largest shareholder is DongFang Electric Corporation with 56% of shares outstanding. This implies that they have majority interest control of the future of the company. For context, the second largest shareholder holds about 1.2% of the shares outstanding, followed by an ownership of 0.7% 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Dongfang Electric

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 most recent data indicates that insiders own less than 1% of Dongfang Electric Corporation Limited. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around HK$159m worth of shares (at current prices). It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 34% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Dongfang Electric. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

We can see that Private Companies own 56%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Dongfang Electric better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Dongfang Electric 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.

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