Key Insights

• Lingyi iTech (Guangdong)'s significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• Lingsheng Investment (Jiangsu) Co., Ltd. owns 59% of the company
• Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

To get a sense of who is truly in control of Lingyi iTech (Guangdong) Company (SZSE:002600), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 60% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, private companies as a group endured the highest losses last week after market cap fell by CN¥8.2b.

In the chart below, we zoom in on the different ownership groups of Lingyi iTech (Guangdong).

What Does The Institutional Ownership Tell Us About Lingyi iTech (Guangdong)?

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 Lingyi iTech (Guangdong). 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. 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 Lingyi iTech (Guangdong), (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Lingyi iTech (Guangdong). Lingsheng Investment (Jiangsu) Co., Ltd. is currently the company's largest shareholder with 59% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. In comparison, the second and third largest shareholders hold about 2.1% and 0.6% of the stock. Fangqin Zeng, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Lingyi iTech (Guangdong)

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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

We can see that insiders own shares in Lingyi iTech (Guangdong) Company. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around CN¥1.5b worth of shares (at current prices). If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 30% stake in the company, and hence can't easily be ignored. 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 Company Ownership

Our data indicates that Private Companies hold 60%, of the company's shares. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Lingyi iTech (Guangdong) better, we need to consider many other factors. For instance, we've identified 2 warning signs for Lingyi iTech (Guangdong) (1 is significant) that you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.