Xiamen Yan Palace Bird's Nest Industry Co., Ltd.'s (HKG:1497) last week's 15% decline must have disappointed private equity firms who have a significant stake
Key Insights
- The considerable ownership by private equity firms in Xiamen Yan Palace Bird's Nest Industry indicates that they collectively have a greater say in management and business strategy
- The top 5 shareholders own 53% of the company
- Insiders own 27% of Xiamen Yan Palace Bird's Nest Industry
To get a sense of who is truly in control of Xiamen Yan Palace Bird's Nest Industry Co., Ltd. (HKG:1497), it is important to understand the ownership structure of the business. With 30% stake, private equity firms possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).
And last week, private equity firms endured the biggest losses as the stock fell by 15%.
In the chart below, we zoom in on the different ownership groups of Xiamen Yan Palace Bird's Nest Industry.
View our latest analysis for Xiamen Yan Palace Bird's Nest Industry
What Does The Lack Of Institutional Ownership Tell Us About Xiamen Yan Palace Bird's Nest Industry?
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 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. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Xiamen Yan Palace Bird's Nest Industry might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.
Hedge funds don't have many shares in Xiamen Yan Palace Bird's Nest Industry. Our data shows that Xiamen Shuangdanma Industrial Development Co., Ltd. is the largest shareholder with 14% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 13% and 9.1%, of the shares outstanding, respectively. Wenbin Zheng, who is the third-largest shareholder, also happens to hold the title of Vice Chairman. Furthermore, CEO Youquan Li is the owner of 7.2% of the company's shares.
Our research also brought to light the fact that roughly 53% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.
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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.
Insider Ownership Of Xiamen Yan Palace Bird's Nest Industry
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
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.
Our information suggests that insiders maintain a significant holding in Xiamen Yan Palace Bird's Nest Industry Co., Ltd.. Insiders own HK$717m worth of shares in the HK$2.7b company. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.
General Public Ownership
The general public-- including retail investors -- own 27% 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 Equity Ownership
With a stake of 30%, private equity firms could influence the Xiamen Yan Palace Bird's Nest Industry board. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.
Private Company Ownership
Our data indicates that Private Companies hold 14%, 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:
It's always worth thinking about the different groups who own shares in a company. But to understand Xiamen Yan Palace Bird's Nest Industry better, we need to consider many other factors.
Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.
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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.