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London
July 4, 2024
PI Global Investments
Private Equity

Private equity firms are Dizal (Jiangsu) Pharmaceutical Co., Ltd.’s (SHSE:688192) biggest owners and were rewarded after market cap rose by CN¥1.4b last week


Key Insights

  • Significant control over Dizal (Jiangsu) Pharmaceutical by private equity firms implies that the general public has more power to influence management and governance-related decisions
  • A total of 2 investors have a majority stake in the company with 52% ownership
  • Institutions own 12% of Dizal (Jiangsu) Pharmaceutical

A look at the shareholders of Dizal (Jiangsu) Pharmaceutical Co., Ltd. (SHSE:688192) can tell us which group is most powerful. We can see that private equity firms own the lion’s share in the company with 31% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, private equity firms collectively scored the highest last week as the company hit CN¥15b market cap following a 10% gain in the stock.

In the chart below, we zoom in on the different ownership groups of Dizal (Jiangsu) Pharmaceutical.

See our latest analysis for Dizal (Jiangsu) Pharmaceutical

SHSE:688192 Ownership Breakdown February 29th 2024

What Does The Institutional Ownership Tell Us About Dizal (Jiangsu) Pharmaceutical?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Dizal (Jiangsu) Pharmaceutical does have institutional investors; and they hold a good portion of the company’s stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It’s therefore worth looking at Dizal (Jiangsu) Pharmaceutical’s earnings history below. Of course, the future is what really matters.

SHSE:688192 Earnings and Revenue Growth February 29th 2024

We note that hedge funds don’t have a meaningful investment in Dizal (Jiangsu) Pharmaceutical. Looking at our data, we can see that the largest shareholder is SDIC Innovation Investment Management Co., Ltd. with 26% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 26% and 14%, of the shares outstanding, respectively. Additionally, the company’s CEO Zhang Xiaolin directly holds 1.8% of the total shares outstanding.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Dizal (Jiangsu) Pharmaceutical

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. 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.

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.

We can see that insiders own shares in Dizal (Jiangsu) Pharmaceutical Co., Ltd.. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around CN¥491m worth of shares (at current prices). If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

The general public– including retail investors — own 12% 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 an ownership of 31%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and — as the name suggests — don’t invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

Our data indicates that Private Companies hold 15%, of the company’s shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Public Company Ownership

We can see that public companies hold 26% of the Dizal (Jiangsu) Pharmaceutical shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. For instance, we’ve identified 1 warning sign for Dizal (Jiangsu) Pharmaceutical that you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.

Valuation is complex, but we’re helping make it simple.

Find out whether Dizal (Jiangsu) Pharmaceutical is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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.



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