Higher profits give a fillip to cement stocks

Thanks to a hike in cement prices, all the cement manufacturers witnessed higher profits in the January-March quarter of the current year.

This higher profit booking ultimately boosted the stocks of cement companies.

However, the DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), dropped 17 points, or 0.29 per cent, to 5,990 yesterday. Among all sectors, cement rose the highest with a 6.26 per cent jump. Mutual funds dropped the most, falling 1.84 per cent, followed by textile and bank.

"Announcement of higher earnings by listed cement makers is the main reason for the stock price rise," said Richard D' Rozario, managing director of Global Securities. When investors see higher earnings in a certain sector,  they get inspired to buy its shares, he added.

According to the companies' senior officials, their earnings rose due to higher sales along with the increased price of cement in local markets.

In its disclosure yesterday, Confidence Cement announced that its earnings per share had almost tripled to Tk 7.80 in the January-March period of the current fiscal year.

After the news broke, Confidence Cement topped the gainers' list, rising 9.97 per cent atz the DSE, followed by Dutch-Bangla Bank, MI Cement, Rahima Food Corporation, and Premier Cement.

The company said its increased revenue is due to better sales volume, the reduction of cost of materials and decline of finance cost.

A top official of a listed cement company preferring anonymity said that all the cement companies increased the domestic price of their products by about 10 per cent.

"This price hike gave us a chance to make higher profit in the recent quarter," he said.

Cement companies had been struggling for the last few quarters due to the lower prices.

"Our sale was much lower than production capacity, moreover, price of cement was lower compared to our costs so some incurred losses and some saw very nominal margins," he added.

In the January-March period of the current year, all the cement companies witnessed higher profits compared to the same period of the last year.

Meanwhile, Aramit Cement returned to the black after incurring losses in the last few quarters.

Stocks of Beximco Ltd traded the most with Tk 125 crore followed by Confidence Cement, LafargeHolcim Bangladesh, Dutch-Bangla Bank and IFAD Autos.

Turnover, another important indicator of the market, fell 19.21 per cent to Tk 1,736 crore. Banking stocks dominated the turnover chart, covering 19.11 per cent of the total.

At the DSE, 102 stocks advanced, 203 fell and 54 remained unchanged.

Union Capital shed the most, losing 12.65 per cent, followed by First Finance, Pragati Life Insurance, Rupali Life Insurance and Sunlife Insurance.

The Chittagong Stock Exchange (CSE) also fell as the CASPI, the general index of the port city bourse, dropped 19 points, or 0.11 per cent, to 17,359.

Among the traded 297 stocks, 89 rose, 169 fell and 39 remained unchanged.