Key Insights

• The considerable ownership by private companies in Rongsheng Petrochemical indicates that they collectively have a greater say in management and business strategy
• The largest shareholder of the company is Zhejiang Rongsheng Holding Group Co., Ltd. with a 56% stake
• Insider ownership in Rongsheng Petrochemical is 10%

To get a sense of who is truly in control of Rongsheng Petrochemical Co., Ltd. (SZSE:002493), it is important to understand the ownership structure of the business. 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).

Clearly, private companies benefitted the most after the company's market cap rose by CN¥3.9b last week.

Let's delve deeper into each type of owner of Rongsheng Petrochemical, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Rongsheng Petrochemical?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Since institutions own only a small portion of Rongsheng Petrochemical, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

Rongsheng Petrochemical is not owned by hedge funds. The company's largest shareholder is Zhejiang Rongsheng Holding Group Co., Ltd., with ownership of 56%. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. For context, the second largest shareholder holds about 11% of the shares outstanding, followed by an ownership of 6.7% by the third-largest shareholder. Shuirong Li, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Rongsheng Petrochemical

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.

It seems insiders own a significant proportion of Rongsheng Petrochemical Co., Ltd.. It is very interesting to see that insiders have a meaningful CN¥10.0b stake in this CN¥98b business. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public-- including retail investors -- own 19% stake in the company, and hence can't easily be ignored. 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. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Public Company Ownership

It appears to us that public companies own 11% of Rongsheng Petrochemical. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Rongsheng Petrochemical has 2 warning signs (and 1 which is significant) we think you should know about.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.