Zhejiang Realsun Chemical Co.,Ltd.'s (SZSE:301212) biggest owners are private companies who got richer after stock soared 13% last week

Key Insights

• Significant control over Zhejiang Realsun ChemicalLtd by private companies implies that the general public has more power to influence management and governance-related decisions
• 53% of the company is held by a single shareholder (Realsun Chemical Group Co., Ltd.)
• Insiders own 18% of Zhejiang Realsun ChemicalLtd

To get a sense of who is truly in control of Zhejiang Realsun Chemical Co.,Ltd. (SZSE:301212), it is important to understand the ownership structure of the business. We can see that private companies own the lion's share in the company with 57% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, private companies were the biggest beneficiaries of last week’s 13% gain.

Let's take a closer look to see what the different types of shareholders can tell us about Zhejiang Realsun ChemicalLtd.

Check out our latest analysis for Zhejiang Realsun ChemicalLtd

What Does The Lack Of Institutional Ownership Tell Us About Zhejiang Realsun ChemicalLtd?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Zhejiang Realsun ChemicalLtd might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

We note that hedge funds don't have a meaningful investment in Zhejiang Realsun ChemicalLtd. Realsun Chemical Group Co., Ltd. is currently the largest shareholder, with 53% of shares outstanding. This implies that they have majority interest control of the future of the company. Meanwhile, the second and third largest shareholders, hold 9.3% and 8.3%, of the shares outstanding, respectively. Kuai Yu, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Zhejiang Realsun ChemicalLtd

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. 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.

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.

It seems insiders own a significant proportion of Zhejiang Realsun Chemical Co.,Ltd.. It has a market capitalization of just CN¥2.1b, and insiders have CN¥368m worth of shares in their own names. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 25% 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 57%, 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 Zhejiang Realsun ChemicalLtd better, we need to consider many other factors. Be aware that Zhejiang Realsun ChemicalLtd is showing 3 warning signs in our investment analysis , and 1 of those is significant...

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.