Jiangsu Sihuan Bioengineering Co., Ltd's (SZSE:000518) last week's 12% decline must have disappointed individual investors who have a significant stake

Simply Wall St · 10/15 22:24

Key Insights

  • Significant control over Jiangsu Sihuan Bioengineering by individual investors implies that the general public has more power to influence management and governance-related decisions
  • A total of 15 investors have a majority stake in the company with 44% ownership
  • 31% of Jiangsu Sihuan Bioengineering is held by insiders

To get a sense of who is truly in control of Jiangsu Sihuan Bioengineering Co., Ltd (SZSE:000518), it is important to understand the ownership structure of the business. We can see that individual investors own the lion's share in the company with 56% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While the holdings of individual investors took a hit after last week’s 12% price drop, insiders with their 31% also suffered.

In the chart below, we zoom in on the different ownership groups of Jiangsu Sihuan Bioengineering.

Check out our latest analysis for Jiangsu Sihuan Bioengineering

ownership-breakdown
SZSE:000518 Ownership Breakdown October 15th 2024

What Does The Institutional Ownership Tell Us About Jiangsu Sihuan Bioengineering?

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.

Less than 5% of Jiangsu Sihuan Bioengineering 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. So if the company itself can improve over time, we may well see more institutional buyers in the future. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

earnings-and-revenue-growth
SZSE:000518 Earnings and Revenue Growth October 15th 2024

Jiangsu Sihuan Bioengineering is not owned by hedge funds. Qin Fen Yu is currently the company's largest shareholder with 14% of shares outstanding. With 14% and 7.4% of the shares outstanding respectively, Hongming Wang and Kunshan Chuangye Holding Group Co.,Ltd are the second and third largest shareholders.

Our studies suggest that the top 15 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Jiangsu Sihuan Bioengineering

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. 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 Jiangsu Sihuan Bioengineering Co., Ltd. It has a market capitalization of just CN¥2.3b, and insiders have CN¥702m 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, mostly comprising of individual investors, collectively holds 56% of Jiangsu Sihuan Bioengineering shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Company Ownership

We can see that Private Companies own 10%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the 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. To that end, you should be aware of the 1 warning sign we've spotted with Jiangsu Sihuan Bioengineering .

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.