Kuala Lumpur Kepong Berhad (KLSE:KLK) most popular amongst public companies who own 48% of the shares, institutions hold 23%
Simply Wall St
4 min read
Key Insights
Kuala Lumpur Kepong Berhad's significant public companies ownership suggests that the key decisions are influenced by shareholders from the larger public
59% of the business is held by the top 2 shareholders
To get a sense of who is truly in control of Kuala Lumpur Kepong Berhad (KLSE:KLK), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 48% to be precise, is public companies. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Meanwhile, institutions make up 23% of the company’s shareholders. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders.
Let's take a closer look to see what the different types of shareholders can tell us about Kuala Lumpur Kepong Berhad.
What Does The Institutional Ownership Tell Us About Kuala Lumpur Kepong Berhad?
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.
We can see that Kuala Lumpur Kepong Berhad does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Kuala Lumpur Kepong Berhad's historic earnings and revenue below, but keep in mind there's always more to the story.
KLSE:KLK Earnings and Revenue Growth July 26th 2023
Hedge funds don't have many shares in Kuala Lumpur Kepong Berhad. Looking at our data, we can see that the largest shareholder is Batu Kawan Berhad with 48% of shares outstanding. With 11% and 6.9% of the shares outstanding respectively, Employees Provident Fund of Malaysia and Permodalan Nasional Berhad are the second and third largest shareholders.
After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Kuala Lumpur Kepong Berhad
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
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 data suggests that insiders own under 1% of Kuala Lumpur Kepong Berhad in their own names. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own RM138m worth of shares. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.
General Public Ownership
The general public, who are usually individual investors, hold a 17% stake in Kuala Lumpur Kepong Berhad. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Public Company Ownership
Public companies currently own 48% of Kuala Lumpur Kepong Berhad stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.
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.
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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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