Individual investors own 30% of The Bank of East Asia, Limited (HKG:23) shares but private companies control 36% of the company

Simply Wall St · 10/18 22:01

Key Insights

  • The considerable ownership by private companies in Bank of East Asia indicates that they collectively have a greater say in management and business strategy
  • 58% of the business is held by the top 3 shareholders
  • Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

Every investor in The Bank of East Asia, Limited (HKG:23) should be aware of the most powerful shareholder groups. With 36% stake, private companies possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Individual investors, on the other hand, account for 30% of the company's stockholders.

Let's delve deeper into each type of owner of Bank of East Asia, beginning with the chart below.

Check out our latest analysis for Bank of East Asia

ownership-breakdown
SEHK:23 Ownership Breakdown October 18th 2024

What Does The Institutional Ownership Tell Us About Bank of East Asia?

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.

Since institutions own only a small portion of Bank of East Asia, 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. 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
SEHK:23 Earnings and Revenue Growth October 18th 2024

Bank of East Asia is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Sumitomo Mitsui Financial Group, Inc. with 22% of shares outstanding. With 19% and 17% of the shares outstanding respectively, Fundación Bancaria Caixa d'Estalvis i Pensions de Barcelona, la Caixa and Hong Leong Company (Malaysia) Berhad (Hlcm) are the second and third largest shareholders.

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.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Bank of East Asia

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own some shares in The Bank of East Asia, Limited. This is a big company, so it is good to see this level of alignment. Insiders own HK$2.1b worth of shares (at current prices). It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 30% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Bank of East Asia. 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 36%, of the Bank of East Asia 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.

Public Company Ownership

We can see that public companies hold 22% of the Bank of East Asia shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

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 instance, we've identified 2 warning signs for Bank of East Asia that you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.