Swiss institutional investor raises its stakes in BATBC
The current rout of the Dhaka bourse has a silver lining: many well-performing companies are becoming bargains.
Swiss wealth management firm Pictet spotted this opening, which is why one of the funds it manages is set to grab 5.25 lakh shares, or 0.29 per cent, of heavyweight British American Tobacco Bangladesh (BATBC) at the prevailing market price.
Yesterday, the only listed tobacco company's share traded at Tk 910.20, so the purchase will set back PICTET LUX A/C THS KFFC (THS Kingsway Fund) by about Tk 47 crore.
The shares will be bought through the block market from institutional investors. When any shareholder sells or buys shares, they don't negotiate with the management, said Md Azizur Rahman, company secretary of BATBC.
"So, we can't say much about the purchase at this moment. Once the transaction is completed do we learn of the parties."
Since the fund already holds a significant amount of shares of BATBC, it had to make an announcement before it made the purchase, Rahman added.
According to the annual report of 2018, the fund holds 9.99 per cent shares of BATBC. In April 2019, it also bought 1.37 lakh shares.
As the tobacco company's stock has been on the descent in the last two years, Pictet must have thought now was a good time to buy its shares, said another top official of BATBC requesting anonymity.
Coronavirus fears have driven many solid companies' price down, so all on a sudden they became good deals for astute investors, said a stock market analyst requesting anonymity.
"Not all companies' earnings will be affected by coronavirus," he added.
BATBC provided 500 per cent cash dividend and 200 per cent stock dividend in 2018. In the previous two years, it provided 600 per cent cash dividend.
The company's paid-up capital is Tk 180 crore, according to data from the Dhaka Stock Exchage.
In 2018, the company's total revenue rose 14 per cent to Tk 23,312 crore and profit 15 per cent to Tk 1,001 crore.
In the first three quarters of the current financial year, its revenue was up 14.31 per cent to Tk 19,436 crore but its profit was down about 17 per cent to Tk 647.1 crore due to higher tax incidence.
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