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Is Redco Properties Group Limited’s (HKG:1622) Shareholder Ownership Skewed Towards

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Every investor in Redco Properties Group Limited (HKG:1622) should be aware of the most powerful shareholder groups. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. I quite like to see at least a little bit of insider ownership. As Charlie Munger said ‘Show me the incentive and I will show you the outcome.

Redco Properties Group isn’t enormous, but it’s not particularly small either. It has a market capitalization of HK$8.2b, which means it would generally expect to see some institutions on the share registry. In the chart below, we can see that institutions don’t own many shares in the company. We can zoom in on the different ownership groups, to learn more about Redco Properties Group.

See our latest analysis for Redco Properties Group

ownership-breakdown
SEHK:1622 Ownership Breakdown July 20th 2021

What Does The Institutional Ownership Tell Us About Redco Properties Group?

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.

Less than 5% of Redco Properties Group is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it’s the future that counts most.

earnings-and-revenue-growth
SEHK:1622 Earnings and Revenue Growth July 20th 2021

We note that hedge funds don’t have a meaningful investment in Redco Properties Group. Our data suggests that Yeuk Hung Wong, who is also the company’s Top Key Executive, holds the most number of shares at 39%. When an insider holds a sizeable amount of a company’s stock, investors consider it as a positive sign because it suggests that insiders are willing to have their wealth tied up in the future of the company. Meanwhile, the second and third largest shareholders, hold 27% and 8.8%, of the shares outstanding, respectively. Interestingly, the second-largest shareholder, Ruoqing Huang is also Chief Executive Officer, again, pointing towards strong insider ownership amongst the company’s top shareholders.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 66% stake.

Researching institutional ownership is a good way to gauge and filter a stock’s expected performance. The same can be achieved by studying analyst sentiments. 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 Redco Properties Group

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.

It seems that insiders own more than half the Redco Properties Group Limited stock. This gives them a lot of power. That means insiders have a very meaningful HK$6.1b stake in this HK$8.2b business. 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

With a 20% ownership, the general public have some degree of sway over Redco Properties Group. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Redco Properties Group is showing 4 warning signs in our investment analysis , and 1 of those is significant…

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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