10 newly listed companies hit ‘A Category’

The Bangladesh Securities and Exchange Commission (BSEC) elevated ten of the thirteen newly listed companies to the highest “A Category” on the basis of their strong annual financial performance, and payment of more than 10 per cent cash dividend to shareholders.

Among them, companies that ended their financial year in June 2021 got elevated to the A Category in December the same year. Meanwhile, companies that ended their financial year in December 2021 got elevated the same period just by paying 10 per cent or more cash dividends.

The remaining three newly listed companies are trading under the “B category.”

Newly listed companies, set to end their financial year in June 2022, will be able to get elevated to the highest category after a review of their financial report, and by paying the required amount of dividend to their respective shareholders.

Six newly listed companies currently trade under “N Category” in the capital market. Four of these listed in 2022, and two listed in 2021. Among these, one will declare dividend in June 2022, and another already declared dividend but its category has not changed yet.

Some of the companies now trading under “N Category” are BD Thai Food & Beverage Ltd, JMI Hospital Requisite Manufacturing Ltd, Union Bank Ltd, and Union Insurance Company Ltd. They got listed on the Dhaka Stock Exchange (DSE) in 2022.

Bangladesh Pujibazar Biniyogkari Sommilito Oikya Parishad President Ataullah Naeem said, “The newly listed companies showed a tendency to change their category with bonus dividends, regardless of their profits and losses at the end of their first year.

“This could deceive the investors. However, the current regulatory body BSEC has had a positive effect by banning newly listed companies for three years from paying bonus dividends to shareholders in a bid to change their category.”

Energypac Power Generation Ltd, which listed on the stock market through the book building system, is now trading in “A Category” after paying 10 per cent cash dividend to its shareholders at the end of June 2021 financial year.

Taufika Foods and Lovello Ice-Cream listed on fixed price method in 2020 and upgraded to “A Category” with a cash dividend of 11per cent from February 2022.

On April 10, the BSEC in a new directive said if a listed company fails to pay cash dividends to its shareholders for two consecutive years, their category will not move upwards.

On the issue, capital market analyst Abu Ahmed said, “Previously, newly listed companies could not move upwards in the category due to a lack of adequate regulatory supervision.

“There are now several guidelines for new companies, and there are restrictions on paying cash dividends. So there is no chance of cheating investors with bonus dividends once companies are listed.”