Key Insights

• Significant control over ChongQing Zhengchuan Pharmaceutical PackagingLtd by private companies implies that the general public has more power to influence management and governance-related decisions
• The top 2 shareholders own 67% of the company
• Insiders own 33% of ChongQing Zhengchuan Pharmaceutical PackagingLtd

To get a sense of who is truly in control of ChongQing Zhengchuan Pharmaceutical Packaging Co.,Ltd (SHSE:603976), it is important to understand the ownership structure of the business. We can see that private companies own the lion's share in the company with 39% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While the holdings of private companies took a hit after last week's 18% price drop, insiders with their 33% also suffered.

In the chart below, we zoom in on the different ownership groups of ChongQing Zhengchuan Pharmaceutical PackagingLtd.

What Does The Lack Of Institutional Ownership Tell Us About ChongQing Zhengchuan Pharmaceutical PackagingLtd?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. ChongQing Zhengchuan Pharmaceutical PackagingLtd's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

ChongQing Zhengchuan Pharmaceutical PackagingLtd is not owned by hedge funds. Our data shows that Chongqing Zhengchuan Investment Management Co., Ltd. is the largest shareholder with 39% of shares outstanding. In comparison, the second and third largest shareholders hold about 28% and 3.2% of the stock. Yong Deng, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. 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 ChongQing Zhengchuan Pharmaceutical PackagingLtd

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 maintain a significant holding in ChongQing Zhengchuan Pharmaceutical Packaging Co.,Ltd. Insiders have a CN¥698m stake in this CN¥2.1b business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 28% stake in the company, and hence can't easily be ignored. 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

Our data indicates that Private Companies hold 39%, of the company's shares. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - ChongQing Zhengchuan Pharmaceutical PackagingLtd has 3 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

Of course this may not be the best stock to buy. So take a peek at this free 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.