Oriental Energy Co., Ltd.'s (SZSE:002221) market cap dropped CN¥898m last week; Retail investors bore the brunt

Simply Wall St · 10/18 01:08

Key Insights

  • The considerable ownership by retail investors in Oriental Energy indicates that they collectively have a greater say in management and business strategy
  • The top 7 shareholders own 52% of the company
  • 14% of Oriental Energy is held by Institutions

To get a sense of who is truly in control of Oriental Energy Co., Ltd. (SZSE:002221), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are retail investors with 43% 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 CN¥13b last week, retail investors would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of Oriental Energy.

Check out our latest analysis for Oriental Energy

ownership-breakdown
SZSE:002221 Ownership Breakdown October 18th 2024

What Does The Institutional Ownership Tell Us About Oriental Energy?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that Oriental Energy does have institutional investors; and they hold a good portion of the company's stock. 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 Oriental Energy, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
SZSE:002221 Earnings and Revenue Growth October 18th 2024

Hedge funds don't have many shares in Oriental Energy. Donghua Petroleum (Changjiang) Co., Ltd. is currently the company's largest shareholder with 23% of shares outstanding. For context, the second largest shareholder holds about 9.7% of the shares outstanding, followed by an ownership of 8.3% by the third-largest shareholder.

On further inspection, we found that more than half the company's shares are owned by the top 7 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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

Insider Ownership Of Oriental Energy

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

We can see that insiders own shares in Oriental Energy Co., Ltd.. The insiders have a meaningful stake worth CN¥1.3b. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

With a 43% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Oriental Energy. 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

We can see that Private Companies own 33%, of the shares on issue. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Oriental Energy better, we need to consider many other factors. Be aware that Oriental Energy is showing 2 warning signs in our investment analysis , and 1 of those is concerning...

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.