Could The Yangzhou Guangling District Taihe Rural Micro-finance Company Limited (HKG:8252) Ownership Structure Tell Us Something Useful?

Simply Wall St

Mon, Jul 15, 2019, 1:52 AM

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If you want to know who really controls Yangzhou Guangling District Taihe Rural Micro-finance Company Limited (HKG:8252), then you'll have to look at the makeup of its share registry. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.'

With a market capitalization of HK$1.7b, Yangzhou Guangling District Taihe Rural Micro-finance is a small cap stock, so it might not be well known by many institutional investors. Our analysis of the ownership of the company, below, shows that institutional investors have not yet purchased shares. Let's take a closer look to see what the different types of shareholder can tell us about 8252.

View our latest analysis for Yangzhou Guangling District Taihe Rural Micro-finance

SEHK:8252 Ownership Summary, July 15th 2019

What Does The Lack Of Institutional Ownership Tell Us About Yangzhou Guangling District Taihe Rural Micro-finance?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Yangzhou Guangling District Taihe Rural Micro-finance might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

SEHK:8252 Income Statement, July 15th 2019

We note that hedge funds don't have a meaningful investment in Yangzhou Guangling District Taihe Rural Micro-finance. 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 Yangzhou Guangling District Taihe Rural Micro-finance

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

We can see that insiders own shares in Yangzhou Guangling District Taihe Rural Micro-finance Company Limited. As individuals, the insiders collectively own HK$120m worth of the HK$1.7b company. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public holds a 21% stake in 8252. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

We can see that Private Companies own 72%, of the shares on issue. 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 Yangzhou Guangling District Taihe Rural Micro-finance better, we need to consider many other factors.

I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.

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