XJ Electric Co., Ltd.'s (SZSE:000400) market cap dropped CN¥4.1b last week; Private companies bore the brunt

Simply Wall St · 10/17 22:19

Key Insights

  • XJ Electric's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
  • 50% of the business is held by the top 11 shareholders
  • 24% of XJ Electric is held by Institutions

If you want to know who really controls XJ Electric Co., Ltd. (SZSE:000400), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 39% to be precise, is private companies. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, private companies as a group endured the highest losses last week after market cap fell by CN¥4.1b.

Let's delve deeper into each type of owner of XJ Electric, beginning with the chart below.

View our latest analysis for XJ Electric

ownership-breakdown
SZSE:000400 Ownership Breakdown October 17th 2024

What Does The Institutional Ownership Tell Us About XJ Electric?

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.

XJ Electric already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at XJ Electric's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
SZSE:000400 Earnings and Revenue Growth October 17th 2024

XJ Electric is not owned by hedge funds. China Electric Equipment Group Co., Ltd. is currently the company's largest shareholder with 38% of shares outstanding. In comparison, the second and third largest shareholders hold about 1.9% and 1.8% of the stock.

After doing some more digging, we found that the top 11 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of XJ Electric

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 most recent data indicates that insiders own less than 1% of XJ Electric Co., Ltd.. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around CN¥209k worth of shares (at current prices). It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 36% stake in XJ Electric. 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

It seems that Private Companies own 39%, of the XJ Electric stock. 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 XJ Electric better, we need to consider many other factors. Take risks for example - XJ Electric has 1 warning sign we think you should be aware of.

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.