16 firms under scanner | The Daily Star
11:00 PM, October 20, 2009 / LAST MODIFIED: 11:00 PM, October 20, 2009

16 firms under scanner

An abnormal hike in share prices, especially of some companies that had been in the red for years, has evoked a debate over possible manipulation of those in the stock market.
On allegations of such manipulation, the Dhaka bourse opened a probe on Sunday to find out what made the share transaction of 16 companies so unusual.
As of yesterday, the overall market PE (price-earning) was 19.55, which was 18.21 at the end of September this year. The August PE was 17.50.
But stock-wise PE ratio is extremely high for many companies. And the ratio is infinite for those poor performing firms, meaning returns from investment on such companies cannot be assumed.
Share prices of such laggard companies are on the rise, although transaction and price movement of these companies' shares do not match their fundamentals.
Market insiders say some influential investors by disseminating rumours are trying to manipulate the prices of shares of the companies under question. They also took advantage of the weak monitoring by the regulator and the Dhaka Stock Exchange management.
The 16 companies that came under the prime bourse lens are: Meghna Condensed Milk, Meghna Pet, Padma Cement, Shaympur Sugar Mills, Zeal Bangla Sugar Mills, Aziz Pipe, Samata Leather, Chittagong Vegetables, Northern Jute, Alfa Tobacco, Quasem Silk, Modern Industries, BLTC, Safco Spinning, Beach Hatchery and CMC Kamal.
Of them, only Beach Hatchery is being traded under A-category, as the company has been upgraded recently from Z-category following a 10 percent dividend disbursement. The rest 15 belong to Z category.
When contacted, DSE Acting Chief Executive Officer Satipati Moitra refused to make comments on the investigation over telephone.
Securities and Exchange Commission Chairman Ziaul Haque Khondker, however, said these "errant" companies are under SEC watch as well.
“We have already directed the Dhaka bourse to put 51 laggard companies on the over-the-counter (OTC) market,” he said, sounding a warning of stringent action against the companies, if allegations are found valid.
Padma Cement had declared a 12 percent dividend for shareholders in 2002, the year it was listed on DSE.
Since then, the company had not announced any dividend and was incurring losses until 2008. The company shares traded below Tk 5 until February this year, an amount less than half its face value of Tk 10 each.
Share prices shot up by more than 600 percent just in eight months, not on the basis of company fundamentals, but on several rumours about a change in company management, a merger and new investments by some influential persons.
Quasem Silk is another company whose share prices suddenly skyrocketed from Tk 3 in February to Tk 10 in a short span. Following the abnormal hike, the SEC suspended Quasem Silk share trade.
However, the trade resumed on October 7 on a court order, and the price of each share rose as high as Tk 28 just within 10 trading days. Earlier, some investors filed a writ petition against the SEC suspension move.
But DSE's recent probe finds that production of the textile company remained closed since 2002 and the entrepreneurs had sold off most of its land, building and machinery at Tk 1.10 crore.
CMC Kamal, a textile mill, is another example of share prices surging since August. It was trading below its face value of Tk 100 at the time, but traded at Tk 280 each yesterday.
The company had not given any dividend since 2005, but its prices were going up from August.

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