Key Insights

• Significant insider control over Ligao FoodsLtd implies vested interests in company growth
• 50% of the business is held by the top 5 shareholders
• Institutions own 16% of Ligao FoodsLtd

To get a sense of who is truly in control of Ligao Foods Co.,Ltd. (SZSE:300973), it is important to understand the ownership structure of the business. We can see that individual insiders own the lion's share in the company with 56% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Clearly, insiders benefitted the most after the company's market cap rose by CN¥490m last week.

In the chart below, we zoom in on the different ownership groups of Ligao FoodsLtd.

What Does The Institutional Ownership Tell Us About Ligao FoodsLtd?

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.

Ligao FoodsLtd already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Ligao FoodsLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

Ligao FoodsLtd is not owned by hedge funds. Our data shows that Yuhui Peng is the largest shareholder with 19% of shares outstanding. With 10% and 9.8% of the shares outstanding respectively, Songtao Zhao and Baokun Bai are the second and third largest shareholders. Baokun Bai, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors. Furthermore, CEO Hejun Chen is the owner of 6.5% of the company's shares.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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 Ligao FoodsLtd

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 the majority of Ligao Foods Co.,Ltd.. This means they can collectively make decisions for the company. So they have a CN¥4.0b stake in this CN¥7.2b business. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 22% 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 6.1%, of the company's shares. 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 Ligao FoodsLtd better, we need to consider many other factors. Be aware that Ligao FoodsLtd is showing 2 warning signs in our investment analysis , and 1 of those is a bit unpleasant...

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.