Key Insights
- Significant control over Sembcorp Industries by private equity firms implies that the general public has more power to influence management and governance-related decisions
- 53% of the business is held by the top 2 shareholders
- Institutional ownership in Sembcorp Industries is 15%
If you want to know who really controls Sembcorp Industries Ltd (SGX:U96), then you’ll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are private equity firms with 49% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Meanwhile, individual investors make up 35% of the company’s shareholders.
Let’s take a closer look to see what the different types of shareholders can tell us about Sembcorp Industries.
See our latest analysis for Sembcorp Industries
What Does The Institutional Ownership Tell Us About Sembcorp Industries?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
Sembcorp Industries already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Sembcorp Industries’ historic earnings and revenue below, but keep in mind there’s always more to the story.
Sembcorp Industries is not owned by hedge funds. Temasek Holdings (Private) Limited is currently the largest shareholder, with 49% of shares outstanding. Capital Research and Management Company is the second largest shareholder owning 3.4% of common stock, and The Vanguard Group, Inc. holds about 1.9% of the company stock.
To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.
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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Sembcorp Industries
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 information suggests that Sembcorp Industries Ltd insiders own under 1% of the company. Keep in mind that it’s a big company, and the insiders own S$96m worth of shares. The absolute value might be more important than the proportional share. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.
General Public Ownership
With a 35% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Sembcorp Industries. 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.
Private Equity Ownership
With a stake of 49%, private equity firms could influence the Sembcorp Industries board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 3 warning signs we’ve spotted with Sembcorp Industries (including 1 which doesn’t sit too well with us) .
Ultimately the future is most important. You can access this free report on analyst forecasts for the company.
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.
Valuation is complex, but we’re helping make it simple.
Find out whether Sembcorp Industries 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.
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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.
