Towngas Smart Energy Company Limited (HKG:1083) share price fell 5.5% last week; public companies would not be happy

If you want to know who really controls Towngas Smart Energy Company Limited (HKG:1083), then you need to look at the composition of their share register. With 67% of the capital, public companies hold the maximum shares in the company. That is, the group will benefit the most if the stock goes up (or lose the most if there is a downturn).

As the market capitalization fell to HK$9.4 billion last week, public companies would have suffered the highest losses than any other group of shareholders in the company.

Let’s dive deeper into each type of Towngas Smart Energy owner, starting with the table below.

Our analysis indicates that 1083 is potentially undervalued!

SEHK:1083 Ownership Distribution November 2, 2022

What does institutional ownership tell us about Towngas Smart Energy?

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.

Towngas Smart Energy already has institutions registered in the share register. Indeed, they hold a respectable stake in the company. This may indicate that the company has some degree of credibility in the investment community. However, it is best to be wary of relying on the so-called validation that accompanies institutional investors. They are also sometimes wrong. When multiple institutions hold a stock, there is always a risk that they are in a “crowded trade”. When such a transaction goes wrong, multiple parties may compete to quickly sell shares. This risk is higher in a company with no history of growth. You can see Towngas Smart Energy’s historic earnings and revenue below, but keep in mind there’s always more to tell.

earnings-and-revenue-growth
SEHK: 1083 Earnings and Revenue Growth Nov 2, 2022

Hedge funds don’t have a lot of shares in Towngas Smart Energy. The company’s largest shareholder is The Hong Kong and China Gas Company Limited, with a 67% stake. This implies that they have majority control over the future of the company. Affinity Equity Partners is the second largest shareholder with 3.6% of common shares and Invesco Ltd. owns approximately 1.4% of the company’s shares.

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. A number of analysts cover the stock, so you can look at growth forecasts quite easily.

Towngas Smart Energy Insider Ownership

The definition of company insiders can be subjective and varies from jurisdiction to jurisdiction. Our data reflects individual insiders, capturing at least board members. 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.

Insider ownership is positive when it signals that executives think like the true owners of the company. However, strong insider ownership can also give immense power to a small group within the company. This can be negative in certain circumstances.

Our information suggests that insiders of Towngas Smart Energy Company Limited own less than 1% of the company. It’s a fairly large company, so it would be possible for board members to hold a significant stake in the company, without holding much of a proportional interest. In this case, they own about HK$46 million worth of shares (at current prices). It’s always good to see at least some insider ownership, but it might be worth checking to see if those insiders have sold.

General public property

The general public, who are usually individual investors, hold a 22% stake in Towngas Smart Energy. Although this group may not necessarily make the decisions, they can certainly have a real influence on the way the business is run.

Ownership of a public company

It appears to us that public companies hold 67% of Towngas Smart Energy. It’s hard to say for sure, but it suggests they have intertwined business interests. This could be a strategic stake, so it’s worth monitoring this space for ownership changes.

Next steps:

While it is worth considering the different groups that own a business, there are other, even more important factors. Example: we have identified 3 warning signs for Towngas Smart Energy you should be aware of, and 1 of them is potentially serious.

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 the financial statements are dated. This may not be consistent with the annual report figures for the full year.

Valuation is complex, but we help make it simple.

Find out if smart city gas energy is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

See the free analysis

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.

Karen J. Nelson