What does the ownership structure of the Scholar Education Group (HKG: 1769) look like?

Every investor in Scholar Education Group (HKG: 1769) should know about the most powerful shareholder groups. Large companies usually have institutions as shareholders, and we usually see insiders holding shares in smaller companies. Warren Buffett said he enjoys “a business with sustainable competitive advantages that is led by skilled, owner-oriented people.” So it’s nice to see some insider ownership as it may suggest that the management is owner-driven.

Scholar Education Group is not a large corporation by global standards. It has a market cap of HK $ 1.0 billion, which means it wouldn’t get the attention of many institutional investors. Looking at our data on ownership groups (below), it looks like institutional investors haven’t bought much of the company yet. Let’s dig deeper into each type of owner to find out more about Scholar Education Group.

See our latest analysis for Scholar Education Group

SEHK: 1769 Breakdown of ownership November 23, 2021

What does the lack of institutional ownership tell us about the Scholar Education Group?

Small companies that are not very actively traded often lack institutional investors, but it is less common to see large companies without them.

There can be various reasons why no institution owns shares in a company. Typically, smaller newly listed companies do not attract much attention from fund managers, as it would not be possible for large fund managers to forge a meaningful position in the company. Alternatively, there could be something about the business that has kept institutional investors out. Scholar Education Group results and revenues (below) may not be convincing to institutional investors – or they may simply not have looked at the company closely.

profit and revenue growth
SEHK: 1769 Growth in profit and revenue on November 23, 2021

Hedge funds don’t have a lot of shares in Scholar Education Group. From our data, we infer that the largest shareholder is Qiyuan Chen (who also holds the title of Top Key Executive) with 39% of the shares outstanding. This is generally considered a good sign when insiders own a significant number of company shares, and in this case, we are happy to see a company insider playing the role of a key stakeholder. Meanwhile, the second and third largest shareholders hold 25% and 12% of the outstanding shares, respectively.

To make our study more interesting, we found that the top 2 shareholders have a controlling stake in the company, which means that they are powerful enough to influence the decisions of the company.

While it makes sense to study a company’s institutional ownership data, it also makes sense to study analysts’ sentiments to know which way the wind is blowing. The title is covered by analysts, but it could become even more famous over time.

Insider property of the Scholar Education Group

The definition of business insiders can be subjective and vary from jurisdiction to jurisdiction. Our data reflects individual insiders, capturing at least board members. The management ultimately reports to the board of directors. However, it is not uncommon for managers to be board members, especially if they are founders or CEOs.

Most view insider ownership as a positive, as it can indicate that the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

It appears that insiders own a significant proportion of Scholar Education Group. It has a market cap of just HK $ 1.0 billion, and insiders have shares worth HK $ 387 million in their own name. We would say this shows alignment with shareholders, but it should be noted that the company is still quite small; some insiders may have founded the company. You can click here to see if these insiders bought or sold.

General public property

The general public, including retail investors, own a 24% stake in the company and therefore cannot be easily ignored. While this property size may not be enough to influence a policy decision in their favor, they can still have a collective impact on company policies.

Private shareholders

With a 12% stake, private equity firms could influence the board of directors of the Scholar Education Group. Sometimes we see private equity sticking around for the long haul, but generally they have a shorter investment horizon and – as the name suggests – don’t invest much in public companies. After some time, they may look to sell and redeploy their capital elsewhere.

Owned by a private company

It appears that private companies own 25% of the shares of the Scholar Education Group. Private companies can be related parties. Sometimes insiders have an interest in a public company through a stake in a private company, rather than in their own capacity as an individual. While it is difficult to draw general conclusions, it should be noted that this is an area for further research.

Next steps:

I find it very interesting to see who exactly owns a company. But to really understand better, we have to take other information into account as well. Know that Scholar Education Group shows 4 warning signs in our investment analysis , you must know…

Ultimately the future is the most important. You can access this free analyst forecast report for the company.

NB: The figures in this article are calculated from data for the last twelve months, which refer to the 12-month period ending on the last date of the month of date of the financial statement. This may not be consistent with the figures in the annual report for the entire year.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in the mentioned stocks.

Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to the editorial team (at) Simplywallst.com.

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