Private companies invested in Ecovacs Robotics Co., Ltd. (SHSE:603486) copped the brunt of last week's CN¥2.2b market cap decline

Simply Wall St · 10/14 22:45

Key Insights

  • Significant control over Ecovacs Robotics by private companies implies that the general public has more power to influence management and governance-related decisions
  • The top 2 shareholders own 57% of the company
  • Insider ownership in Ecovacs Robotics is 27%

Every investor in Ecovacs Robotics Co., Ltd. (SHSE:603486) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private companies with 44% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While insiders who own 27% came under pressure after market cap dropped to CN¥27b last week,private companies took the most losses.

In the chart below, we zoom in on the different ownership groups of Ecovacs Robotics.

View our latest analysis for Ecovacs Robotics

ownership-breakdown
SHSE:603486 Ownership Breakdown October 14th 2024

What Does The Institutional Ownership Tell Us About Ecovacs Robotics?

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.

Ecovacs Robotics 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. 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 Ecovacs Robotics, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
SHSE:603486 Earnings and Revenue Growth October 14th 2024

Ecovacs Robotics is not owned by hedge funds. The company's largest shareholder is Suzhou Chuangling Zhihui Investment Management Co., Ltd., with ownership of 42%. For context, the second largest shareholder holds about 15% of the shares outstanding, followed by an ownership of 10% by the third-largest shareholder. Dongqi Qian, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board. Additionally, the company's CEO Jianhua Zhuang directly holds 2.0% of the total shares outstanding.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 57% stake.

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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Ecovacs Robotics

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 Ecovacs Robotics Co., Ltd.. Insiders own CN¥7.3b worth of shares in the CN¥27b company. That's quite meaningful. 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 21% 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 44%, 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. Be aware that Ecovacs Robotics is showing 3 warning signs in our investment analysis , you should know about...

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.