Xiamen Solex High-tech Industries Co., Ltd.'s (SHSE:603992) 6.3% gain last week benefited both private companies who own 54% as well as insiders

Simply Wall St · 10/14 23:48

Key Insights

  • Significant control over Xiamen Solex High-tech Industries by private companies implies that the general public has more power to influence management and governance-related decisions
  • A total of 2 investors have a majority stake in the company with 54% ownership
  • Insiders own 32% of Xiamen Solex High-tech Industries

To get a sense of who is truly in control of Xiamen Solex High-tech Industries Co., Ltd. (SHSE:603992), it is important to understand the ownership structure of the business. With 54% stake, private companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

While private companies were the group that benefitted the most from last week’s CN¥469m market cap gain, insiders too had a 32% share in those profits.

Let's take a closer look to see what the different types of shareholders can tell us about Xiamen Solex High-tech Industries.

View our latest analysis for Xiamen Solex High-tech Industries

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SHSE:603992 Ownership Breakdown October 14th 2024

What Does The Institutional Ownership Tell Us About Xiamen Solex High-tech Industries?

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.

Since institutions own only a small portion of Xiamen Solex High-tech Industries, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. 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.

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SHSE:603992 Earnings and Revenue Growth October 14th 2024

We note that hedge funds don't have a meaningful investment in Xiamen Solex High-tech Industries. Our data shows that Solex Group Investment Limited is the largest shareholder with 31% of shares outstanding. Huasong Zhou is the second largest shareholder owning 23% of common stock, and Xiamen Shuilishi Techonology Co., Ltd. holds about 22% of the company stock. Huasong Zhou, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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 Xiamen Solex High-tech Industries

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 Xiamen Solex High-tech Industries Co., Ltd.. Insiders own CN¥2.5b worth of shares in the CN¥7.9b company. That's quite meaningful. 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

With a 13% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Xiamen Solex High-tech Industries. 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 54%, 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. For example, we've discovered 1 warning sign for Xiamen Solex High-tech Industries that you should be aware of before investing here.

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.