Key Insights

• The considerable ownership by individual investors in Kingfa Sci. & Tech indicates that they collectively have a greater say in management and business strategy
• 42% of the business is held by the top 25 shareholders
• Insider ownership in Kingfa Sci. & Tech is 34%

To get a sense of who is truly in control of Kingfa Sci. & Tech. Co., Ltd. (SHSE:600143), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 58% to be precise, is individual investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And individual insiders on the other hand have a 34% ownership in the company. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies.

Let's delve deeper into each type of owner of Kingfa Sci. & Tech, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Kingfa Sci. & Tech?

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.

Kingfa Sci. & Tech already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Kingfa Sci. & Tech's historic earnings and revenue below, but keep in mind there's always more to the story.

Kingfa Sci. & Tech is not owned by hedge funds. Zhimin Yuan is currently the company's largest shareholder with 20% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 4.7% and 3.7%, of the shares outstanding, respectively. Nan Jing Li, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Kingfa Sci. & Tech

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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.

It seems insiders own a significant proportion of Kingfa Sci. & Tech. Co., Ltd.. It is very interesting to see that insiders have a meaningful CN¥7.4b stake in this CN¥22b business. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public -- including retail investors -- own 58% of Kingfa Sci. & Tech. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Kingfa Sci. & Tech is showing 3 warning signs in our investment analysis , and 1 of those is a bit concerning...

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.

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