China Merchants Commercial Real Estate Investment Trust’s (HKG:1503) market cap dropped HK$338m last week; Private companies bore the brunt

Every investor in China Merchants Commercial Real Estate Investment Trust (HKG:1503) should be aware of the most powerful shareholder groups. With 48% stake, private companies possess the maximum shares in the company. 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 as a group endured the highest losses last week after market cap fell by HK$338m.

Let’s delve deeper into each type of owner of China Merchants Commercial Real Estate Investment Trust, beginning with the chart below.

View our latest analysis for China Merchants Commercial Real Estate Investment Trust

SEHK:1503 Ownership Breakdown September 20th 2022

What Does The Institutional Ownership Tell Us About China Merchants Commercial Real Estate Investment Trust?

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

As you can see, institutional investors have a fair amount of stake in China Merchants Commercial Real Estate Investment Trust. 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 China Merchants Commercial Real Estate Investment Trust’s historic earnings and revenue below, but keep in mind there’s always more to the story.

earnings-and-revenue-growthSEHK:1503 Earnings and Revenue Growth September 20th 2022

China Merchants Commercial Real Estate Investment Trust is not owned by hedge funds. China Merchants Group Limited is currently the company’s largest shareholder with 35% of shares outstanding. K.Wah Group is the second largest shareholder owning 13% of common stock, and Pacific Asset Management Co., Ltd. holds about 12% of the company stock.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 61% 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 China Merchants Commercial Real Estate Investment Trust

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 cannot confirm that board members are holding shares personally. We do not see this low level of ownership often, and it is possible our data is imperfect. But shareholders can click here to check if insiders have been selling stock.

General Public Ownership

With a 37% ownership, the general public, mostly comprising of individual investors, have some degree of sway over China Merchants Commercial Real Estate Investment Trust. 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

We can see that Private Companies own 48%, of the shares on issue. 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. Like risks, for instance. Every company has them, and we’ve spotted 5 warning signs for China Merchants Commercial Real Estate Investment Trust (of which 2 make us uncomfortable!) you should know about.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.

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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