Key Insights

• Significant control over Jiangsu Hualan New Pharmaceutical MaterialLtd by retail investors implies that the general public has more power to influence management and governance-related decisions
• The top 6 shareholders own 51% of the company
• 35% of Jiangsu Hualan New Pharmaceutical MaterialLtd is held by Institutions

To get a sense of who is truly in control of Jiangsu Hualan New Pharmaceutical Material Co.,Ltd. (SZSE:301093), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are retail investors with 35% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 19% increase in the stock price last week, retail investors profited the most, but institutions who own 35% stock also stood to gain from the increase.

In the chart below, we zoom in on the different ownership groups of Jiangsu Hualan New Pharmaceutical MaterialLtd.

What Does The Institutional Ownership Tell Us About Jiangsu Hualan New Pharmaceutical MaterialLtd?

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 Jiangsu Hualan New Pharmaceutical MaterialLtd. 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 Jiangsu Hualan New Pharmaceutical MaterialLtd, (below). Of course, keep in mind that there are other factors to consider, too.

Jiangsu Hualan New Pharmaceutical MaterialLtd is not owned by hedge funds. Jiangyin Hualan Electromechanical Technology Co., Ltd. is currently the company's largest shareholder with 22% of shares outstanding. In comparison, the second and third largest shareholders hold about 17% and 5.8% of the stock. Yimin Hua, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

We did some more digging and found that 6 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Jiangsu Hualan New Pharmaceutical MaterialLtd

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

We can see that insiders own shares in Jiangsu Hualan New Pharmaceutical Material Co.,Ltd.. It has a market capitalization of just CN¥3.2b, and insiders have CN¥209m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 35% stake in Jiangsu Hualan New Pharmaceutical MaterialLtd. 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 24%, 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. For example, we've discovered 2 warning signs for Jiangsu Hualan New Pharmaceutical MaterialLtd that you should be aware of before investing here.

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.