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February 26, 2024
PI Global Investments

Private companies in Yuexiu Transport Infrastructure Limited (HKG:1052) are its biggest bettors, and their bets paid off as stock gained 6.8% last week

Key Insights

  • Significant control over Yuexiu Transport Infrastructure by private companies implies that the general public has more power to influence management and governance-related decisions
  • 50% of the business is held by the top 2 shareholders
  • Institutions own 18% of Yuexiu Transport Infrastructure

A look at the shareholders of Yuexiu Transport Infrastructure Limited (HKG:1052) can tell us which group is most powerful. We can see that private companies own the lion’s share in the company with 50% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, private companies collectively scored the highest last week as the company hit HK$7.7b market cap following a 6.8% gain in the stock.

In the chart below, we zoom in on the different ownership groups of Yuexiu Transport Infrastructure.

View our latest analysis for Yuexiu Transport Infrastructure

SEHK:1052 Ownership Breakdown January 4th 2024

What Does The Institutional Ownership Tell Us About Yuexiu Transport Infrastructure?

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.

Yuexiu Transport Infrastructure already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. When multiple institutions own a stock, there’s always a risk that they are in a ‘crowded trade’. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Yuexiu Transport Infrastructure’s historic earnings and revenue below, but keep in mind there’s always more to the story.

SEHK:1052 Earnings and Revenue Growth January 4th 2024

Yuexiu Transport Infrastructure is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Guangzhou Yuexiu Holding Limited with 44% of shares outstanding. China Merchants Group Limited is the second largest shareholder owning 6.0% of common stock, and Matthews International Capital Management, LLC holds about 4.9% of the company stock.

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

Insider Ownership Of Yuexiu Transport Infrastructure

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. 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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our data suggests that insiders own under 1% of Yuexiu Transport Infrastructure Limited in their own names. However, it’s possible that insiders might have an indirect interest through a more complex structure. It appears that the board holds about HK$4.6m worth of stock. This compares to a market capitalization of HK$7.7b. Many tend to prefer to see a board with bigger shareholdings. A good next step might be to take a look at this free summary of insider buying and selling.

General Public Ownership

The general public– including retail investors — own 32% stake in the company, and hence can’t easily be ignored. 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.

Private Company Ownership

Our data indicates that Private Companies hold 50%, 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 3 warning signs we’ve spotted with Yuexiu Transport Infrastructure (including 1 which can’t be ignored) .

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.

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

Find out whether Yuexiu Transport Infrastructure 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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