Key Insights
- Insiders appear to have a vested interest in Nongfu Spring's growth, as seen by their sizeable ownership
- Shanshan Zhong owns 84% of the company
- Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company
If you want to know who really controls Nongfu Spring Co., Ltd. (HKG:9633), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are individual insiders with 84% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
With such a notable stake in the company, insiders would be highly incentivised to make value accretive decisions.
Let's take a closer look to see what the different types of shareholders can tell us about Nongfu Spring.
View our latest analysis for Nongfu Spring
What Does The Institutional Ownership Tell Us About Nongfu Spring?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
Since institutions own only a small portion of Nongfu Spring, 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. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.
We note that hedge funds don't have a meaningful investment in Nongfu Spring. With a 84% stake, CEO Shanshan Zhong is the largest shareholder. This implies that they possess majority interests and have significant control over the company. Investors usually consider it a good sign when the company leadership has such a significant stake, as this is widely perceived to increase the chance that the management will act in the best interests of the company. In comparison, the second and third largest shareholders hold about 0.7% and 0.6% of the stock.
While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Nongfu Spring
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
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.
It seems that insiders own more than half the Nongfu Spring Co., Ltd. stock. This gives them a lot of power. Insiders own HK$319b worth of shares in the HK$378b company. That's extraordinary! It is good to see this level of investment. You can check here to see if those insiders have been selling any of their shares.
General Public Ownership
The general public, who are usually individual investors, hold a 13% stake in Nongfu Spring. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Nongfu Spring better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Nongfu Spring you should know about.
Ultimately the future is most important. You can access this free report on analyst forecasts for the company.
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.