Gamblers messing around with Imam Button stocks

In a quizzical development, the stock price of Imam Button almost doubled in a few weeks though the Chattogram-based button producer has been incurring losses for a decade and stopped production indefinitely in April.

In reply to an enquiry of the Dhaka Stock Exchange, the company on Thursday said it had been unable to log enough revenues and profits since 2011.

As the stock prices of the company rose a whopping 82 per cent within a few weeks, DSE had sent it a notice asking whether there were any reasons behind the price hike.

The company said it had been unable to utilise its production capacity to the fullest due to insufficient sales order, according to a posting on the DSE website on Thursday. On top of that, sales orders have totally crashed thanks to the global coronavirus pandemic.

After the web posting, stocks of Imam Button plunged 10 per cent to close at Tk 33.30 on the Dhaka bourse on Thursday.

When the price of a company, which remained in the junk category for over a decade, jumps more than 80 per cent within a few weeks, it is assumed that gambling might be in play, said an official of a merchant bank, asking not to be named.

"Someone was playing from behind, which was barred by the announcement of production halt," he said, adding that the company has always been used by gamblers.

The earnings per share of the company, which was established in 1996, ran into a total of Tk 0.5 in the negative in the first three quarters of the 2019-20 financial year.

The EPS was Tk 0.29 in the negative during the same period in the previous year.

The company's net asset value is plunging every year: in 2015 it was Tk 9.3, which came down to Tk 5.8 in 2018.

Sponsors and directors hold 29.3 per cent shares of the company, institutional investors 9 per cent and general investors the rest, according to DSE.

Imam Button could not be reached for comment.