What kind of shareholders own the majority of shares of Zhongyu Energy Holdings Limited (HKG:3633)?

Every investor in Zhongyu Energy Holdings Limited (HKG:3633) should know the most powerful shareholder groups. Institutions often own shares in more established companies, while it is not uncommon to see insiders owning a good number of smaller companies. I like to see at least a little insider ownership. As Charlie Munger said “Show me the incentive and I’ll show you the result”.

Zhongyu Energy Holdings isn’t huge, but it’s not particularly small either. It has a market capitalization of HK$20 billion, which means it generally expects to see some institutions listed on the share register. In the graph below, we can see that the institutions do not own a lot of shares in the company. Let’s dig deeper into each type of owner to learn more about Zhongyu Energy Holdings.

See our latest analysis for Zhongyu Energy Holdings

SEHK: 3633 Ownership Breakdown June 2, 2022

What does institutional ownership tell us about Zhongyu Energy Holdings?

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.

The institutions have a very small stake in Zhongyu Energy Holdings. This indicates that the company is on the radar of some funds, but it is not particularly popular with professional investors at the moment. If the company strengthens from here, we could see a situation where more institutions are eager to buy. We sometimes see a rise in the stock price when a few large institutions want to buy a certain stock at the same time. Earnings and revenue history, which you can see below, could be helpful in determining whether more institutional investors will want the stock. Of course, there are also many other factors to consider.

earnings-and-revenue-growth
SEHK: 3633 Profit and Revenue Growth June 2, 2022

We note that hedge funds have no significant investment in Zhongyu Energy Holdings. China Gas Holdings Limited is currently the largest shareholder, with 37% of outstanding shares. In comparison, the second and third shareholders hold around 28% and 6.6% of the shares. Interestingly, the bottom two of the top three shareholders also hold the title of Top Key Executive and Vice Chairman, respectively, suggesting that these insiders have a personal stake in the company.

After digging a little deeper, we found that the 2 major shareholders collectively control more than half of the company’s shares, implying that they have considerable power to influence company decisions.

While studying the institutional ownership of a company can add value to your research, it is also recommended that you research analyst recommendations to better understand a stock’s expected performance. As far as we can tell, there’s no analyst coverage of the company, so it’s probably flying under the radar.

Insider ownership of Zhongyu Energy Holdings

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management is ultimately responsible to the board of directors. However, it is not uncommon for managers to be members of the management board, especially if they are founders or CEOs.

Most view insider ownership as a positive because it can indicate that the board is well aligned with other shareholders. However, there are times when too much power is concentrated within this group.

Our information suggests that insiders hold a significant stake in Zhongyu Energy Holdings Limited. Its market capitalization is only HK$20 billion and insiders hold HK$7.3 billion worth of shares in their own name. It is quite significant. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if these insiders have been buying or selling.

General public property

With a 26% stake, the general public, consisting mainly of individual investors, has some influence over Zhongyu Energy Holdings. This size of ownership, although considerable, may not be sufficient to change company policy if the decision is not in line with other large shareholders.

Ownership of a public company

We understand that state-owned companies own 37% of Zhongyu Energy Holdings. We cannot be sure, but it is quite possible that it is a strategic issue. Businesses can be similar or work together.

Next steps:

It is always useful to think about the different groups that own shares in a company. But to better understand Zhongyu Energy Holdings, we need to consider many other factors. Take for example the ubiquitous specter of investment risk. We have identified 2 warning signs with Zhongyu Energy Holdings (at least 1, which is potentially serious), and understanding them should be part of your investment process.

If you’d rather check out another company – one with potentially superior finances – then don’t miss this free list of interesting companies, supported by solid financial data.

NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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