Jute Spinners posts loss in Q1
Jute Spinners announced losses for the first quarter of the current fiscal year, a development which may have tamed the company's fluctuating stock price.
The jute yarn and twine manufacturer's earnings per share were Tk 11.16 in the negative in July-September while it was Tk 10.24 in the negative during the same period a year ago, data from the Dhaka Stock Exchange (DSE) showed.
Jute Spinners' net asset value stood at Tk 360.14 in the negative as of September 30, 2020.
Yesterday, the company's share dropped 4.07 per cent to Tk 146 following its disclosure on the quarterly loss.
Jute Spinners had been performing poorly for many years, so the sudden rise in its stock price should have been investigated by the market regulator, according to a stockbroker.
The value of Jute Spinners' stocks had doubled over the last four months riding on a rumour that it is becoming a profitable company.
Despite repeated announcements that there is no price-sensitive information that could influence the company's share value, the stock jumped from Tk 81 to Tk 180 between July and November this year.
The stock had gone wild and it seemed nothing could be done to stop it. It declined yesterday after Jute Spinners disclosed its losses for the first quarter.
"Since it is a low capital-based company, it is easy to manipulate, which ultimately allures the gamblers to the stock," the broker said.
The company's paid-up capital was Tk 1.7 crore in the last fiscal year. Its reserve and surplus was Tk 26.7 crore in the negative.
"Investors need to be careful when investing based on rumours. Otherwise, their investment will be at risk," the broker said.
When the Bangladesh Securities and Exchange Commission ran a massive programme to revive junk companies, investors had hoped to see Jute Spinners become profitable, said Ali Hasan, a stock investor.
However, the price of the stock was overvalued even if it had bounced back.
"The people behind the stock's overvaluation should be held responsible by the regulator," the investor added.