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Price hike belies regulatory efforts n Kayes Sohel The prices of low-cap stocks began to rise again, making a mockery of the securities regulator’s efforts to put a lid on unusual price hike of the scrips. The stock prices of these junk-rated companies have jumped on average by between 150% and 23% in the last month. Of the low cap companies, CVO Petro Chemical Refinery Ltd came to the spotlight despite the company is not in continuous production in last six months, according to the Dhaka Stock Exchange (DSE). As soon as it resumed trading on Sunday after two and half month, its share prices increased 7% to Tk943 each. Yesterday, it declined to Tk881. On September 24, Bangladesh Securities and Exchange Commission (BSEC) suspended trading the share for its abnormal price hike. The commission found that the scrips of the company were manipulated between April and August when prices jumped more than 100% to over Tk634. As a result, three companies were fined Tk22lakh, which is lighter than the wrongs they did, said a market player. The BSEC is now in the process of appointing a chartered accountant firm to carry out a special audit of the company, said


DSE top gainer n Tribune Business Desk

Shares of Sinobangla Industries registered highest gains of 9.16% to close at Tk28.4 each on Dhaka Stock Exchange yesterday. Some 0.7% of the total DSE trades or Tk3.8 crore worth of the shares exchanged hands, despite having no recent positive disclosure of the company in the recent times. The shares closed at the highest closing price in last six months. The company reported its third quarter profit of Tk67.6 lakh ending in July 2013 that was lower than the profit of Tk69.9 lakh in the same period last year. In addition, the company’s last published nine-month profit was almost half of the profit in the same period last year. However, the company has been consistent in giving out cash dividend to its investors in the past ranging from 10% to 20% of face value. Earlier on October 31, the company disclosed that it was given the ratings “A-” in the long-term and “ST-3” in the short-term loan that was mostly reflected by its financials (audited) up to June 30, 2013, and relevant quantitative and qualitative information up to the date of rating declaration. The company’s 65.48% of the stock is public whereas only a smaller percentage of 27.41% shares belong to the company sponsors/directors. Sinobangla Industries is listed in the miscellaneous segment at DSE and has an EPS of Tk0.48 along with a price to earnings ratio of 44.38, according to DSE. l

an official. Other low cap companies which are still under regulator’s scanner continued to rise shrugging off the regulator’s warnings. “This may cause huge losses for the late-comer and over enthusiastic investors,” said an analyst at a brokerage firm, adding that some have been trying to fish out of the troubled water. The market remained volatile over the last several months due to the ongoing political turmoil over the general election. Amidst such chaotic situation, low cap companies dominated the trading, making their scrips overvalued. A stock dealer, requesting not to be named, said if take a look at the price movements of scrips that are under investigation, you can see soon after enquiry made by the DSE, share prices of the scrips going up. “That’s why investors swoop on those stocks to make a quick gain amid common perception that the regulator has nothing to do.” Share prices of Rahima Food sharply rose more than 137%, Modern Dyeing 35% and JMI Syringe 23% in the last one month. Earlier, the BSEC had opened a probe into the abnormal share price rise of CVO Petrochemical and other low cap companies, including Mithun Knitting, Tallu Spinning, JMI Syringes and Medical Devices, Alhaj

Textiles, Bangas, Modern Dyeing and Anawar Galvanising. The BSEC investigative team has already submitted their reports against those low cap companies’ unusual rise of share price. An official said the team found some institutions involved with price manipulation of the low cap companies. For poor performance, the DSE has downgraded Rohima Food, Modern Dyeing and CVO Petrochemical to the Z-category with effect from yesterday. Earlier, the DSE served a show-case notice on 16 low-cap companies to know the cause of the abnormal price hike. All the companies replied they have no price sensitive information. DSE Chief Executive Officer Swapan Kumar Bala said: “Investors should be cautious about the unusual price hike of the low-cap companies.” In every possible way, he said they were making the investors aware about those scrips that may upset their investment, he said. Another analyst said price may increase by 100% in 10 days for different factors like growth prospect, low cap, low free-float and finally, if the buyers want. “In a free market, I think, smarts win and fools die. So, if an investor is willing to give 100% higher price, regulator should do nothing,” he added. l

Stocks fall for fourth day n Tribune Report Stocks extended losses for the fourth consecutive session yesterday with thin trading amid long spell of political violence across the country. The market was in the positive territory in first hour of trade but the momentum failed to sustain as sale pressure mostly from textile and energy stocks came in. The benchmark index, DSEX, lost 30 points or 0.8% to close at 4,240. The blue chip comprising DS30 index fell nearly 10 points or 0.7% to 1,468. The Chittagong Stock Exchange Selective Category Index, CSCX, was down 77 points to 8,402. The total DSE turnover stood at about Tk483 crore, a decrease of 18.7% over the previous session, indicating that investors were reluctant to put funds on stocks. “Quite similar with recent sessions, market was upbeat at the beginning, but quickly started losing momentum as the session progressed,” said IDLC Investment

in its market analysis. Negativity gradually overcame optimism, forcing most major sectors to close red. But after rally in the last few days, small cap companies declined on profit taking. Downgrading of CVO Petrochemical Refinery Ltd and Rahima Food in ‘Z’ category put negative impact on overall food sectors. This caused Rahima Food to become the top loser with a fall of 10%. Lanka Bangla Securities said the consolidation in market continued for the fourth consecutive trading session as investors are eyeing on recent economic slowdown. Market sentiment has been gripped by ongoing political unrest that is narrowing the investment in manufacturing sectors and affecting the export and import of the country, it said. Golden Son topped the turnover list, followed by Envoy Textile, Delta Life Insurance, Paramount Textile, CVO Petrochemical Refinery Ltd, CVO Petrochemical Refinery Ltd, Generation Next Fashion and Bengal Windsor Thermoplastics Ltd. l


Rahima Food becomes worst loser as it is downgraded to Z-category n Tribune Business Desk The stock price of Rahima Food has eroded by 10% to Tk82.8 each at the Dhaka Stock Exchange yesterday with a traded volume worth Tk2.3 crore. DSE on Tuesday placed the company in the “Z” category of shares from the “A” category effective since yesterday as the company failed to continue operations for more than last six months. The decision was made in accordance with securities laws. Rally of the shares stopped in the on-going week that brokers predicted to be based on market jitters such as the price fall of palm and palm oil last year (major raw materials imported by Rahima Food) would improve the company’s profitability. Since last September, the price of the stock rose up from Tk17 each to Tk92 on Tuesday. The trading of the stocks was put to a halt since the beginning of October for more than one and a half month in order to stop price manipulation and irrational price hike of the shares. According to auditor’s observation published on DSE in the current month, the company has a huge chunk of receivables of Tk97.7 crore to Elias Brothers Limited, which is close to the total yearly sales of the company. Rahima Food sales are only made to the Elias Brothers and the dependence on one party is very much risky and threat for the company’s viability, said an analyst. According to the agreement made before, the interest on bank loan taken for importing raw materials is being paid by Elias Brothers Limited on behalf of Rahima Food. The company reported a quarterly loss in the first quarter as it had to bear the expenses without any production. The stock price ranged between Tk14.4 and Tk92 in last six months. The company is listed in the food and allied segment of the stock market that has a negative EPS of Tk0.16 and a negative price to earning ratio of -129.38, according to DSE. l

DCCI gets new office bearers n Tribune Business Desk

Shipping and real estate businessman, Mohammad Shahjahan Khan has been elected as president of the Dhaka Chamber of Commerce and Industry (DCCI) for the year 2014. The election was held at the 52nd Annual General Meeting (AGM) of DCCI at its auditorium in Dhaka yesterday, said a press release. Osama Taseer was elected as senior vice president whereas Kh Shahidul Islam elected as vice president. The newly elected directors for the term 2014-16 are Sameer Sattar, AKD Khair Mohammad Khan, KG Karim, Mukter Hossain Chowdhury and S Rumi Saifullah. l

December 19, 2013  
December 19, 2013