This is what the shareholding structure of Impro Precision Industries Limited (HKG:1286) looks like

If you want to know who actually controls Impro Precision Industries Limited (HKG:1286), then you will need to look at the composition of its share register. Institutions often own shares in more established companies, while it is not uncommon to see insiders owning a good number of smaller companies. I like to see at least a little insider ownership. As Charlie Munger said “Show me the incentive and I’ll show you the result”.

With a market capitalization of HK$4.7 billion, Impro Precision Industries is a small cap stock, so it may not be well known to many institutional investors. Our analysis of societal ownership below shows that institutions own shares in society. Let’s dig deeper into each owner type to learn more about Impro Precision Industries.

Check out our latest analysis for Impro Precision Industries

SEHK: 1286 Ownership Breakdown August 9, 2022

What does institutional ownership tell us about Impro Precision Industries?

Institutional investors typically compare their own returns to the returns of a commonly tracked index. They therefore generally consider buying larger companies that are included in the relevant benchmark.

We can see that Impro Precision Industries 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. If multiple institutions change their minds on a stock at the same time, you could see the stock price drop quickly. So it’s worth checking out Impro Precision Industries’ earnings history below. Of course, the future is what really matters.

SEHK: 1286 Earnings and Revenue Growth August 9, 2022

We note that hedge funds have no significant investment in Impro Precision Industries. The company’s CEO, Ruibo Lu, is the largest shareholder with 65% of the outstanding shares. With such a large stake, we infer that they have significant control over the future of the company. It’s generally considered a good sign when insiders hold a significant amount of stock in the company, and in that case, we’re happy to see a company insider with such skin in the game. During this time, the second and third largest shareholders hold 9.9% and 5.5% of the outstanding shares respectively.

While it makes sense to study data on a company’s institutional ownership, it also makes sense to study analyst sentiment to find out which way the wind is blowing. There is some analyst coverage of the stock, but it could still become better known over time.

Impro Precision Industries Insider Ownership

The definition of an insider may differ slightly from country to country, but board members still matter. Management is ultimately responsible to the board of directors. However, it is not uncommon for managers to be members of the management board, especially if they are founders or CEOs.

I generally consider insider ownership to be a good thing. However, there are times when it is more difficult for other shareholders to hold the board accountable for decisions.

Our information suggests that insiders own more than half of Impro Precision Industries Limited. This gives them effective control of the business. That means they own HK$3.0 billion worth of shares in the HK$4.7 billion company. It is quite significant. Good to see this level of investment. You can check here if these insiders have bought recently.

General public property

The general public, including retail investors, owns 14% 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.

Private equity ownership

With a 5.5% stake, private equity firms could influence Impro Precision Industries’ board of directors. Some investors might be encouraged by this, as private equity is sometimes able to encourage strategies that help the market see the value of the company. Alternatively, these holders could exit the investment after making it public.

Private Company Ownership

Private companies appear to own 9.9% of Impro Precision Industries shares. 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 individuals. Although it is difficult to draw general conclusions, it should be noted that this is an area for further research.

Next steps:

It is always useful to think about the different groups that own shares in a company. But to better understand Impro Precision Industries, we need to consider many other factors. Take for example the ubiquitous specter of investment risk. We have identified 2 warning signs with Impro Precision Industries (at least 1, which is a little worrying), and understanding them should be part of your investment process.

But finally it’s the future, not the past, which will determine the performance of the owners of this company. Therefore, we think it’s advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.

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