Could the ownership structure of the Malaysia Building Society Berhad (KLSE:MBSB) tell us something useful?

Every Malaysia Building Society Berhad (KLSE:MBSB) investor should know the most powerful shareholder groups. Generally speaking, as a company grows, institutions increase their ownership. Conversely, insiders often decrease their ownership over time. Companies that were previously publicly owned tend to have less insider ownership.

Malaysia Building Society Berhad isn’t huge, but it’s not particularly small either. It has a market capitalization of RM4.3b, which means that it would generally expect to see certain institutions listed on the share register. Looking at our ownership group data (below), it appears that institutions own shares in the company. Let’s dig deeper into each owner type to learn more about Malaysia Building Society Berhad.

See our latest analysis for Malaysia Building Society Berhad

KLSE: MBSB Ownership Breakdown May 27, 2022

What does institutional ownership tell us about the Malaysia Building Society Berhad?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it is included in a major index. We would expect most companies to have some institutions listed, especially if they are growing.

We can see that Malaysia Building Society Berhad has institutional investors; and they own a good part of the shares of the company. This suggests some credibility with professional investors. But we cannot rely solely on this fact since institutions sometimes make bad investments, like everyone else. It is not uncommon to see a sharp decline in the stock price if two large institutional investors attempt to sell a stock at the same time. It is therefore worth checking the past earnings trajectory of Malaysia Building Society Berhad (below). Of course, keep in mind that there are other factors to consider as well.

earnings-and-revenue-growth
KLSE: MBSB Earnings and Revenue Growth May 27, 2022

Since institutional investors own more than half of the issued shares, the board will likely have to pay attention to their preferences. Hedge funds do not have many shares in Malaysia Building Society Berhad. Looking at our data, we can see that the major shareholder is the Malaysian Employees Provident Fund with 66% of the outstanding shares. This essentially means that they have considerable influence, if not absolute control, over the future of the company. For context, the second shareholder owns approximately 1.8% of the outstanding shares, followed by a 1.2% ownership by the third shareholder.

While studying the institutional ownership of a company can add value to your research, it is also recommended that you research analyst recommendations to better understand a stock’s expected performance. There is some analyst coverage of the stock, but it could still become better known over time.

Malaysia Building Society Berhad Insider Property

The definition of an insider may differ slightly from country to country, but board members still matter. The management of the company answers to the board of directors and the latter must represent the interests of the shareholders. In particular, sometimes the senior executives themselves sit on the board of directors.

Most view insider ownership as a positive because it can indicate that the board is well aligned with other shareholders. However, there are times when too much power is concentrated within this group.

Our most recent data indicates that insiders hold shares in Malaysia Building Society Berhad. It has a market capitalization of just RM4.3 billion and insiders have shares worth RM55 million, in their own name. This shows at least some alignment. You can click here to see if these insiders have been buying or selling.

General public property

The general public, including retail investors, owns 26% of the company’s capital and therefore cannot be easily ignored. While this size of ownership may not be enough to sway a policy decision in their favor, they can still have a collective impact on company policies.

Next steps:

It is always useful to think about the different groups that own shares in a company. But to better understand Malaysia Building Society Berhad, we need to consider many other factors. For example, we have identified 3 warning signs for Malaysia Building Society Berhad of which you should be aware.

At the end of the day 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 using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.

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

Comments are closed.