The stock market regulator Bangladesh Securities and Exchange Commission (BSEC) on Thursday ordered the Dhaka Stock Exchange (DSE) to launch an investigation to identify whether any fraudulent activities were behind the price jump of Himadri Ltd shares.
The premier bourse will have to complete the investigation within 10 working days since the issuance of the order, said BSEC Executive Director Mohammad Rezaul Karim in a statement.
The securities regulator’s order came after The Business Post carried a news report titled ‘Defying the bear market, Himadri share rockets by Tk2,180 in a month’ on Wednesday.
In August, the small-cap company’s shares surged by Tk 2,180 or over 280 per cent to Tk 3713.7 per share on Thursday, as per the DSE data.
When majority of fundamental shares, including the blue-chips, were on the back, stocks of Himadri, a small-cap company listed on the DSE’s SME board, witnessed an unusual price jump in the last one month.
When shares of the SME firm skyrocketed, the benchmark index of the country’s premier bourse recorded a significant plunge owing to jitters concerning the market outlook.
The company, which provides cold storage facilities for agro-products such as potatoes across the country, also saw its share price soar by 80 times in the last three months.
Shares of the company, which belongs to the SME board, closed at Tk 3713.7 on Thursday, up 10 per cent or Tk 337.10 from the previous day’s price. It traded only seven shares on the Dhaka bourse on the day.
The firm’s share price was Tk 38.8 each on April 27 this year, the DSE data shows.
Meanwhile, Himadri on Tuesday informed the DSE that there was no undisclosed price-sensitive information for the recent unusual price hike of its shares.
Himadri, which operates six potato cold storage units in the northern part of Bangladesh and is a subsidiary of Ejab Group, has offloaded 11,775 shares, the lowest among the listed SMEs.
Market operators said the company decided to increase its authorised share capital before issuing new equity shares and raising the paid-up capital as the number of its shares remains very low.
This move might have influenced its stock price, they said.
In June this year, Himadri finally decided to increase its authorised capital by 25 times to Tk 50 crore from the existing Tk 2 crore, and the paid-up capital to Tk 0.75 crore.
Himadri’s total number of shares currently stands at only 7.5 lakh, and more than 65.72 per cent of its shares are held by sponsor-directors.
The company paid a 10 per cent cash dividend for the year ended June 30, 2022.
The SME firm reported earnings per share (EPS) of Tk 3.67, and net asset value (NAV) per share of Tk 1,827.9 for the year ended June 30, 2022, compared to Tk 8.23 and Tk 1,822.92 for the same period the year before.
Top large-cap stocks yielded virtually no returns in the first half of 2023, while shares of many small-cap companies continued to rise sharply on the Dhaka Stock Exchange, an indication that investors believe they have hit their potential.
The market’s heavyweight multinational, billion-dollar Grameenphone (GP), accounts for over 8 per cent of the DSE total market cap, which is the highest single holding in the bourse.
A stock investor in that multinational company has not earned any capital gains from investments in the company in the last six months.
Not just GP’s investors, but investors in top market-cap companies have been disappointed in the first six months (Jan-Jun period of 2023) of this year, amid the Bangladesh Securities and Exchange Commission’s imposition of a floor price for stocks.
Meanwhile, shares of many small-cap companies continued to rise sharply in the country’s prime bourse in the last six months, while stocks of most large-cap firms remained stuck at their floor prices.
Investors in Himadri Ltd., which traded on the ‘DSE SME’ board, have earned over 5,000 per cent capital gains in the last half year, DSE data shows.
“The trading pattern on the SME Board looks unusual because a daily rise of 8 per cent to 10 per cent is not justifiable,” a stockbroker on condition of anonymity said.
Analysts and stock market insiders said this is not a good sign for the country’s stock market. If the trend goes unabated, it would pose a threat to market stability.
During the period, many investors were seen rushing towards rumor-based junk stocks, which helped many small-cap issues top the gainers board, they said.