China XLX Fertiliser Ltd.'s (HKG:1866) last week's 14% decline must have disappointed retail investors who have a significant stake

Simply Wall St · 10/14 22:51

Key Insights

  • The considerable ownership by retail investors in China XLX Fertiliser indicates that they collectively have a greater say in management and business strategy
  • 52% of the business is held by the top 3 shareholders
  • 18% of China XLX Fertiliser is held by insiders

If you want to know who really controls China XLX Fertiliser Ltd. (HKG:1866), then you'll have to look at the makeup of its share registry. We can see that retail investors own the lion's share in the company with 46% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As market cap fell to HK$5.9b last week, retail investors would have faced the highest losses than any other shareholder groups of the company.

Let's take a closer look to see what the different types of shareholders can tell us about China XLX Fertiliser.

See our latest analysis for China XLX Fertiliser

ownership-breakdown
SEHK:1866 Ownership Breakdown October 14th 2024

What Does The Institutional Ownership Tell Us About China XLX Fertiliser?

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.

Less than 5% of China XLX Fertiliser is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

earnings-and-revenue-growth
SEHK:1866 Earnings and Revenue Growth October 14th 2024

Hedge funds don't have many shares in China XLX Fertiliser. Pioneer Top Holdings Limited is currently the largest shareholder, with 29% of shares outstanding. With 18% and 4.9% of the shares outstanding respectively, Yunhua Yan and Teeroy Limited are the second and third largest shareholders. Yunhua Yan, who is the second-largest shareholder, also happens to hold the title of Senior Key Executive.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of China XLX Fertiliser

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 information suggests that insiders maintain a significant holding in China XLX Fertiliser Ltd.. Insiders have a HK$1.0b stake in this HK$5.9b business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 46% 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 34%, of the company's shares. 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.

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 China XLX Fertiliser is showing 3 warning signs in our investment analysis , you should know about...

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.