Investors, brokers see bias in DSE move

Investors and brokers, angered by the bourse's decision to halt trade of Aftab Automobiles and Eastern Housing shares, have alleged that the DSE's move is discriminatory in monitoring trade practices.

Even though the trade of Eastern Housing shares resumed yesterday, the trade of Aftab Automobile shares did not.

The Dhaka Stock Exchange (DSE) management halted the trade of the two companies on Tuesday for a market probe, in response to unusual price jumps of shares.

The share prices of several companies soared more than Aftab and Eastern, but the DSE overlooked those, aggrieved investors and brokers said.

“It's a biased decision,” said a broker.

The prices of each Beximco Synthetics share almost doubled in just five days, while the prices of Bangladesh Welding Electrodes (BD Welding), Kay&Que and Olympic Industries shares soared by more than 100 percent in the last two and a half months, he cited.

“But the DSE management did not halt trade of those issues,” he said.

The DSE management however denied any bias in monitoring trade. “We did it to make a market probe,” said AFM Shariful Islam, chief executive officer of DSE.

Asked why they did not take steps against shares whose prices doubled or trebled in the last two and a half months, he replied, “We are observing the price movement of those issues.”

In response to an inquiry regarding the factors, the DSE might have considered before halting the trade of Aftab and Eastern shares, the CEO said, “The price hike was one factor.”

He however did not disclose the other reasons, saying, “We will disclose the other factors after the inquiry."

An investor, nicknamed Mannan, said the DSE management could not present any valid reason to explain the suspension of trade of the two companies.

“The DSE was pressurised to take the decision by some member of the board of directors, who would benefit from the halt,” he alleged.

“If the DSE gave the same treatment to the other scrips, whose prices rocketed, then we would not raise any allegations,” he said.

Denying the allegations, DSE President Rakibur Rahman said the Board of Directors has no influence over management.

Meanwhile, Aftab Automobiles, in response to the DSE probe, said they do not have any undisclosed material, decision or information relating to the company's operation or profitability that might have an impact on the price and volume of their shares traded in the stock exchange.

The company however said they are exploring possibilities of BMRE of their assembling and body building units and fund raising thereto. The exploration is at a preliminary stage, it said.

Eastern Housing said they do not have any undisclosed materials, facts, decisions, or information relating to the company's operations and profitability that may influence share prices.

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BSRM's billet plant goes into operation by August

BSRM Group, a leader in iron and steel manufacturing in Bangladesh, is setting up a high quality billet making plant in Chittagong to ensure a steady supply of quality billets for its rolling mills, senior officials said.

The construction of the new plant, BSRM Iron & Steel Company Ltd (BISCO), claimed to be the largest billet-manufacturing unit, is progressing fast. It is expected to start its commercial operation from August this year.

BISCO's estimated cost will be Tk 1.946 billion, of which Tk 1.362 will be provided by several financiers.

“We signed a syndicated term loan facility for the Tk 1.362 billion with 14 financial institutions on Tuesday,” said Aameir Alihussain, director of BSRM Group.

Industrial and Infrastructure Development Finance Company (IIDFC) is the lead arranger of the syndicated term loan. Representatives from the participating banks and BSRM signed the loan agreements.

Alihussain Akberali, chairman of BISCO, M Matiul Islam, chairman of IIDFC, Asaduzzaman Khan, managing director, SA Farooqui, managing director of Standard Bank, Erfanuddin Ahmed, president and managing director of Bank Asia, M Shahidul Islam, deputy managing director of United Commercial Bank, Rakibur Rahman, president of Dhaka Stock Exchange, and AB Siddique, CEO of Chittagong Stock Exchange, were present at the signing ceremony.

“The production capacity of the new plant will be around 1.50 lakh tonnes billet per year. The full output of the plant will be consumed by BSRM Steels Limited, an entity of our group,” Aameir Alihussain said, revealing another plan to set up a 1.50 tonne capacity billet making plant after setting up the ongoing plant.

The BSRM Group set up a captive billet making plant in 1996.

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$15m IFC loan for PRAN business expansion

International Finance Corporation (IFC), a member of the World Bank group, has financed 15 million dollars to PRAN group, a leading agro processing and export company in the country.

This was disclosed at a press conference at the National Press Club yesterday.

Among others, Major General (retd) Amjad Khan Chowdhury, chief executive of PRAN Group, Uzma Chowdhury, director of Pran Group, Per Kjellerhaug, regional manager for IFC-Bangladesh, Bhutan, Maldives, Nepal and Sri Lanka were present at the conference.

The loan will support PRAN Group's strategic investment plan in six food categories, such as snacks, confectionery, juice, beverage, culinary products, dairy and premium rice over the next three years.

PRAN Group aims to make high-quality, low-cost, processed and packaged food readily available to the lower and middle-income population of Bangladesh and other countries it serves, said Amjad Khan Chowdhury.

“One of the IFC's main priorities in the region is to support local companies in priority sectors such as food processing, particularly those with significant benefits to local suppliers and employment,” said Per Kjellerhaug.

Oscar Chemerinskl, IFC director for Global Agribusiness, in separate statement said, “IFC is proud to be making its first investment into the critically important agribusiness sector in Bangladesh.

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DSE halts trade of two firms

In response to share price jumps of Aftab Automobiles and Eastern Housing, the Dhaka Stock Exchange management yesterday halted trade of the two companies to make way for a market probe, a move to prevent unusual security price hikes.

Some brokers and investors were however disappointed by DSE's decision.

“Why is the management only looking at these two particular issues? There are many other issues, whose prices have doubled or trebled in the last one month. The DSE management did not halt trade of those issues,” said a broker.

The DSE will investigate whether there were any efforts to manipulate prices or any insider news on why the share prices rocketed, officials said.

“We are closely monitoring the share price hikes of some scrips, beginning with Aftab Automobiles and Eastern Housing,” a senior official of DSE told The Daily Star.

He said the share prices of one company doubled in just a month, while the prices of the other soared by more than 50 percent in the same period.

Prior to the halt, each Aftab Automobiles share was traded at Tk 1,224 yesterday, while the company closed at Tk 683.25 a month ago.

Meanwhile, each Eastern Housing share was traded at Tk 496, before the halt by the DSE yesterday. The price for a share was Tk 314.25 a month ago.

However, share prices of the two companies were seen to be rising for some time now.

Share prices of Aftab Automobiles, a sister concern of Navana Group, was riding on speculation that another concern of the group, Navana CNG, will be listed directly on the stock exchanges.

But officials from Navana Group previously said they did not take any such decision. They are simply studying the possibilities of a direct listing by Navana CNG.

It was also rumoured to believe that Navana CNG's direct listing would benefit Aftab Automobiles financially, as it has stakes in the former.

But Aftab Automobiles said they do not have any stakes in Navana CNG.

On the other hand, share prices of Eastern Housing were soaring on speculation that the company will be evaluated soon, the results of which would disclose the company's strengths.

The temporary suspension of trade also left an impact on the market.

As news of the halt was posted on the DSE website at around 11:30am, the market started falling and finally, it closed low.

The DSE General Index fell by 15.11 points, or 0.56 percent, to 2,637.99. The DSE All Share Price Index also declined 12.75 points, or 0.57 percent to 2,194.94.

Losers outnumbered the gainers by 169 to 82. Seven securities however remained unchanged.

A total of 3,43,12,630 shares worth Tk 496.79 crore were traded on the premier bourse.

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State banks better off

Four state-owned banks performed better than before by realising around 50 percent of their default loans from top 20 defaulters and pulled off 94 percent of their targets from other defaulters in 2008, according to a central bank review released yesterday.

The four state banks had the target of realising Tk194 crore from top 20 loan defaulters last year but they could realise Tk98 crore, while the banks' target from other defaulters was Tk1,039 crore but they could realise Tk980 crore.

The Bangladesh Bank (BB) not only evaluated their cash recovery, it also reviewed their achievements in operating expenses, costs of deposit, manpower rationalisation, and reducing classified loans against the target fixed for them in 2008.

BB officials said the banks succeeded in reaching the targets in some areas but failed in others.

Sonali Bank had the target of retrieving Tk100 crore from top 20 defaulters but could realise only around Tk21 crore, while its cash recovery target from other defaulters was Tk484 crore but its realisation was Tk474 crore or 98 percent of the target.

In 2008 the bank's target of reducing operating costs over 2007 was 5 percent, but instead the expenditure increased by 20 percent to Tk649 crore.

Also the cost of deposit of the bank went up from 4.80 percent in 2007 to 5.04 percent in 2008.

Classified loan decreased by percentage but increased by gross amount from Tk6,859 crore in 2007 to Tk7,217 crore in 2008. However the growth in percentage went down by 2.08 percentage points to stand at 33.28 percent last year.

The bank reduced the number of cases with Artha Rin Adalat (loan court) from 7,141 in 2007 to 5,727 in 2008, and also cut manpower by 1,994 and the total number of staff stood at 20,548 in 2008. The BB said all these were positive signs.

Janata Bank though could not achieve success in realising loans from the top 20 defaulters, it exceeded the target in retrieving loans from other defaulters. Its target of realisation from top 20 was Tk30.25 crore, but the recovery was Tk20.17 crore or 66 percent of its target.

The bank's recovery target from other defaulters was Tk181.504 crore, but the realistaion was Tk258.54 crore or 142 percent of the target. It also succeeded in lowering the costs of deposit and the number of manpower. Cost of deposit was 4.79 percent in 2007 that came down to 4.53 percent in 2008.

The bank failed to reduce its operating expenses against its target of 5 percent as the expenditure increased around 15 percent to stand at Tk461 crore in 2008.

However its number of cases with the loan court decreased but the amount against the cases increased compared to December 2007. The number of cases dropped from 5,728 in 2007 to 4,720 in 2008, but the amount went up from Tk2,725 crore to Tk2,755 crore.

Agrani Bank though succeeded in realising loans from top 20 defaulters, it failed to reach the target for other defaulters. Its recovery target from the top 20 was Tk21.78 crore but the realisation was Tk37.34 crore or 171 percent of the target. However its target from other defaulters was Tk302 crore but it recovered Tk209 crore or 69 percent of the target.

The bank could lower its cost of deposit from 3.74 percent in 2007 to 3.44 percent in 2008. It reduced manpower by 357 and its total staff stood at 2,988 in 2008. However it failed to cut operating expenses that rose by 14 percent to Tk343 crore.

Its classified loan was Tk3,178 crore or 28 percent of its outstanding loan in 2007, which came down to Tk2,548 crore or 24 percent in 2008.

The bank's number of cases with the loan court remained almost unchanged at 7,462 in 2008. But the amount against the cases increased from Tk3,166 crore in 2007 to Tk3,630 crore in 2008.

Rupali Bank failed to reach its recovery target from all the defaulters.

The bank's target from the top 20 defaulters was around Tk42 crore but the recovery was around Tk20 crore. From other defaulters its loan recovery target was Tk72 crore, whereas it retrieved around Tk38 crore in 2008

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COMPANY NEWS

Prime Finance First Mutual Fund: As per decision of the Board of Directors of DSE, trading of the units of Prime Finance First Mutual Fund will start at DSE with effect from March 17, 2009 under 'A' category. DSE Trading Code for Prime Finance First Mutual Fund is "1STPRIMFMF" and DSE company code # 12168.

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alarafah bank

As per audited accounts as on 31.12.08, the Bank has reported profit after tax of Tk. 668.24 m. with EPS of Tk. 48.29 as against Tk. 347.31 m. and Tk. 25.10 (restated) respectively as on 31.12.07

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SOUTHEASTBANK

The Board of Directors has recommended cash dividend @ 15% and stock dividend @ 20% for the year 2008. The Bank has also informed that an EGM will be held for approval of enhancement of Authorized Capital from Tk. 350 crore to Tk. 1000 crore subject to obtaining approval from competent authorities. Date of EGM and AGM: 26.04.09, Time of EGM and AGM: 10:00 AM and 10:30 AM respectively. Venue of the EGM and AGM: "Hall of Fame", Bangladesh-China Friendship Conference Centre, Sher-E-Bangla Nagar, Dhaka-1207. Record Date for EGM and AGM: 30.03.09

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