Joy Spreader Group Inc.'s (HKG:6988) last week's 13% decline must have disappointed retail investors who have a significant stake

Aug 29, 2023

Stock Analysis

Every investor in Joy Spreader Group Inc. (HKG:6988) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are retail investors with 53% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While the holdings of retail investors took a hit after last week’s 13% price drop, insiders with their 37% also suffered.

Let's take a closer look to see what the different types of shareholders can tell us about Joy Spreader Group.

View our latest analysis for Joy Spreader Group

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.

We can see that Joy Spreader Group does have institutional investors; and they hold a good portion of the company's stock. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Joy Spreader Group's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Joy Spreader Group. Looking at our data, we can see that the largest shareholder is the CEO Zinan Zhu with 32% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 4.8% and 4.4%, of the shares outstanding, respectively.

A deeper look at our ownership data shows that the top 14 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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

Our most recent data indicates that insiders own a reasonable proportion of Joy Spreader Group Inc.. Insiders have a HK$667m stake in this HK$1.8b business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

The general public, mostly comprising of individual investors, collectively holds 53% of Joy Spreader Group shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too.

I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.

Find out whether Joy Spreader Group is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.

Joy Spreader Group Inc., a marketing technology company, provides digital marketing services in Mainland China and Hong Kong.

Flawless balance sheet and slightly overvalued.