With 78% ownership, Unitrade Industries Berhad (KLSE:UNITRAD) insiders have a lot riding on the company's future

Simply Wall St

Sat, Aug 12, 2023, 6:34 PM 4 min read

Key Insights

Significant insider control over Unitrade Industries Berhad implies vested interests in company growth
Keng Chor Sim owns 66% of the company
Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

To get a sense of who is truly in control of Unitrade Industries Berhad (KLSE:UNITRAD), it is important to understand the ownership structure of the business. With 78% stake, individual insiders possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

With such a notable stake in the company, insiders would be highly incentivised to make value accretive decisions.

Let's delve deeper into each type of owner of Unitrade Industries Berhad, beginning with the chart below.

Check out our latest analysis for Unitrade Industries Berhad

ownership-breakdown — KLSE:UNITRAD Ownership Breakdown August 13th 2023

What Does The Institutional Ownership Tell Us About Unitrade Industries Berhad?

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 Unitrade Industries Berhad, 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 company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. We sometimes see a rising share price when a few big institutions want to buy a certain stock at the same time. The history of earnings and revenue, which you can see below, could be helpful in considering if more institutional investors will want the stock. Of course, there are plenty of other factors to consider, too.

earnings-and-revenue-growth — KLSE:UNITRAD Earnings and Revenue Growth August 13th 2023

Hedge funds don't have many shares in Unitrade Industries Berhad. Keng Chor Sim is currently the company's largest shareholder with 66% of shares outstanding. This implies that they have majority interest control of the future of the company. For context, the second largest shareholder holds about 2.6% of the shares outstanding, followed by an ownership of 2.1% by the third-largest shareholder. Interestingly, the bottom two of the top three shareholders also hold the title of Chief Executive Officer and Member of the Board of Directors, respectively, suggesting that these insiders have a personal stake in the company.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Unitrade Industries Berhad

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. 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.

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 information suggests that insiders own more than half of Unitrade Industries Berhad. This gives them effective control of the company. Given it has a market cap of RM461m, that means they have RM362m worth of shares. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 18% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Unitrade Industries Berhad. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 2 warning signs for Unitrade Industries Berhad (1 can't be ignored) that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.