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The initial public offering (IPO) subscription of NRB Bank will begin on 28 January 2024 and continue till 1 February.

Earlier, on 9 November, the bank received approval from the Bangladesh Securities and Exchange Commission (BSEC) to raise Tk100 crore through issuing new shares at Tk10 each under the IPO.

The bank will invest Tk92 crore in government securities, Tk4.17 crore in the secondary market and Tk3.83 crore to meet its IPO expenses.

In the same period, its consolidated net profit after tax stood at Tk16 crore and earnings per share Tk0.27, which was Tk55 crore and Tk0.94 respectively in 2022.

As on 30 September 2023, its net asset value per share stood at Tk12.72.

UCB Investment and Shahjalal Equity Management Ltd are working as the issue managers for NRB Bank’s IPO.

Its authorised capital was Tk1,000 crore and paid-up capital Tk590.59 crore.

NRB Bank, established in 2013, launched a wide variety of products and services under different categories such as retail banking, SME banking, NRB banking, corporate banking, and e-banking.

As of 2023, the bank has 50 branches, 24 sub-branches, 50 ATM booth outlets, and 308 agent outlets across the country.

According to the prospectus of the bank, at the end of September 2023, its non-performing loan (NPL) ratio stood at 6.10% of the total outstanding, which was 3.22% a year ago.

At the end of September 2023, its capital adequacy ratio stood at 14.19%, which was 16.60% in 2022.

During the period, the total loans and advances of the bank stood at Tk5,697 crore, which was Tk4,949 crore at the end of December 2022.

Its total liabilities were Tk7,575 crore at the end of September 2023.

Khan Brothers PP Woven Bags, a non-performing listed firm, seemed destined for no recovery from its consistent losses over the past few years. The price of its shares had remained stagnant at Tk10 each until April 2023.

But in a surprising turn of events, the company’s share price soared rapidly and closed a staggering 676% higher at Tk103.2 on 28 December at the Dhaka Stock Exchange (DSE), compared to the previous year’s close.

Other such companies with weak fundamentals and a history of losses also joined Khan Brothers in the share price jump party, despite showing no signs of business recovery in the near future.

According to an annual review by Shanta Securities, six out of the year’s top ten gainers were non-performing companies’ stocks.

Share prices of these companies soared between 96% and 237% throughout 2023, whereas fundamentally sound stocks stayed stuck at the floor price—a regulatory measure to prevent free fall in share prices.

RN Spinning posted a 237% yearly jump in share price, Khulna Printing’s stock soared 236%, FAR Chemical’s 166%, Fine Foods’ 124%, and Crystal Insurance’s 111%.

On the other hand, Sea Pearl Beach Resorts led the loser table of the DSE, witnessing a 46% decline and emerging as the worst performer during the year. Other notable stocks with highest price corrections included Metro Spinning, Rahim Textile, Orion Infusion, Sonargaon Textile, and BD Thai Food, all experiencing losses of over 30% in share prices.

Market insiders noted that, despite regulatory efforts, the bearish market witnessed an uninterrupted surge in the share prices of these speculative stocks. Even under regulatory scrutiny, these firms’ share prices continued to climb.

The factory of the year’s top gainer Khan Brothers is now closed, but the DSE still conducted an inspection due to the unprecedented increase in the company’s share price.

Another junk stock, Khulna Printing & Packaging Limited that is a concern of the Lockpur Group, also saw abnormal surge in its share price. Its owner SM Amzad Hossain, who is also the former chairman of South Bangla Agriculture and Commerce (SBAC) Bank, escaped the country in 2021 even after the Anti-Corruption Commission (ACC) imposed a travel ban because of his misappropriation of funds.

He returned in October this year and since then, Khulna Printing’s share price has been skyrocketing despite the company being non-operational for the last three years.

The DSE carried out an inspection in Khulna Printing as well in order to find the reasons behind its share price increase.

In its market review for 2023, EBL Securities highlighted that the continuation of the floor price mechanism negatively impacted liquidity and fund flow into the market. Approximately 60% of the total market capitalisation remained stuck at the floor price, contributing to illiquidity throughout the year.

The overall investment appetite remained subdued due to a bleak macroeconomic environment, with investor participation concentrated on specific speculative stocks driven by the expectation of quick gains, the review reads.

EBL Securities further noted that investors predominantly focused on short-term gains, hesitating to take long-term positions in equities due to wavering confidence in the market’s momentum.

EBL Securities hopeful for a turnaround in 2024

The capital market is poised for a turnaround in 2024, shedding the sluggish performance of the preceding years.

The brokerage firm anticipates that the Bangladesh Securities and Exchange Commission (BSEC) may consider withdrawing the floor price mechanism in 2024.

While an immediate correction in the equity market is expected following the withdrawal, the market is projected to bounce back, and overall market turnover is anticipated to significantly improve as unlocked funds become available for reinvestment.

The prime index, DSEX, may initially dip to as low as 5,500 points if the floor price is withdrawn. But it shall eventually exceed 6,500 points. However, the index is likely to fall short of 7,000 points unless heightened investors’ participation and enthusiasm can be achieved, EBL Securities stated.

Photo: Courtesy

Mir Akhter Hossain Limited, the country’s sole construction company listed on the Dhaka and Chattogram bourses, currently has 33 projects worth Tk9,268 crore in its hands, according to the company’s annual report for the fiscal 2022-23.

Some of the notable projects currently underway include the Dhaka-Sylhet national highway, the development of Shah Amanat International Airport, the construction of a bridge over the Paira river, and numerous road projects across the country.

Despite a decline in the company’s business performance since its stock market listing in 2021, Mir Akhter looks to a promising future, thanks to its successful bids for so many government projects, according to market insiders.

The implementation of the Annual Development Program (ADP) has grown 9.21% year-on-year to Tk2.46 lakh crore in FY23. The approved budget allocated for the ADP for the FY24 is Tk2.63 lakh crore.

Mir Akhter’s FY23 annual report also mentions that the country was affected by a number of challenges including trade barriers, appreciation of dollar and high energy prices in addition to the Russia-Ukraine war.

The average annual inflation reached a ten-year high of 7.7% in 2022 and 9.7% in July 2023. The World Bank projects inflation to remain at this level in 2023 before easing to 7.7% in 2025, the report reads.

Sohela Hossain, chairperson of Mir Akhter, said in the annual report, “Amid these challenges, Mir Akhter was able to run the business with a certain level of efficiency and we worked to retain the company’s profitability. We undertook a number of precautionary measures to deal with the possible adverse impact on business.”

“We also reoriented our project management approach to better deal with the altered circumstances,” she added.

The company’s Managing Director Mir Nasir Hossain, said in the report, “Bangladesh, being a developing country, is in constant need of implementing infrastructural development projects. As a leading construction company, we are one of the major players of this sector.”

“The company was also able to maintain a positive operating cash flow indicating that its overall financial and liquidity position is still sound. We are always monitoring the market, industry partners and the overall economy for any future plans,” he added.

Mir Akhter got listed on the stock exchanges through issuing shares at Tk60 each under the book-building method of the initial public offering (IPO). General investors each got a 10% discount rate at Tk54 per share.

At the end of Wednesday’s trading session, its shares closed at Tk50.80 each at the Dhaka Stock Exchange (DSE). Its share price is far below the risky zone in terms of the price earnings ratio (P/E). Its P/E ratio is 15.35 based on the annual audited report, where over 40 P/E ratio is determined as risky.

But the company’s total liabilities stood at Tk1,440 crore as on 30 September 2023, which was 59% of the total assets and 238% higher than the shareholders equity. If the lending interest rate increases, the company will face difficulties to maintain the profit growth, said market insiders.

The initial public offering (IPO) subscription of Best Holdings Limited, the operator of the high-end hotel Le Meridien in Dhaka’s Nikunja 2 area, has been changed.

Initially set for 8 January 2024, the subscription window will now begin on 14 January and continue until 18 January, as per the new schedule published on the stock exchange website on Tuesday.

To participate in the company’s IPO, Bangladeshi resident general investors must have at least Tk50,000 invested in listed securities by 3 January 2024. Non-resident Bangladeshis (NRBs) require Tk1 lakh.

Earlier, the electronic bidding for the company’s shares took place between 20 November and 23 November, where the cut-off price of the shares was fixed at Tk35 each.

Qualified and institutional investors including mutual funds will buy 25% of the company’s shares at the cut-off price. Individual investors will be able to buy the remaining shares at a 30% discounted price of Tk24 each.

The cut-off price is the price at which institutional investors have primary shares allocated for them in an IPO under the book-building method.

Earlier, on 10 October, the Bangladesh Securities and Exchange Commission (BSEC) allowed Best Holdings to raise Tk350 crore through an IPO under the book-building method from the capital market.

The company will use 50% of the fund or Tk176 crore for building construction and other civil works, 33%, or Tk115.6 crore for repayment of existing liabilities, and around 13% for local machinery and equipment acquisition.

Best Holdings is in the process of raising fresh funds to build a resort in Bhaluka. The cost of the total project, which will offer world-class hospitality outside the capital, is Tk1,586.91 crore, as per the prospectus. For this project, the IPO and the company’s fund will contribute Tk755 crore and the rest will come from loans.

According to the audited financial report of June 2023, the earnings per share (EPS) of the company stood at Tk1.24 and the year-weighted average EPS was at Tk0.95.

The Dhaka Stock Exchange (DSE) has finally changed its auditor after 36 long years. 

Earlier, A Qasem & Co Chartered Accountants used to be the country’s premier bourse’s auditor. Now, the DSE has appointed Hoda Vasi Chowdhury & Co Chartered Accountants for auditing its financial statements for the 2023-24 fiscal year in a move to ensure transparency and diversification.

In the DSE’s annual general meeting (AGM) held on 21 December, the bourse’s shareholders approved the auditor change.

Dhaka bourse’s Managing Director ATM Tariquzzaman told TBS, “In the AGM, shareholders have approved the proposal of changing auditor, and a new auditor has been appointed for the next fiscal year.”

The shareholders of the DSE have also approved a 4% cash dividend for FY23. In the previous fiscal year, the DSE had paid a 6% cash dividend to its shareholders.

According to DSE’s annual report, the bourse had witnessed a significant drop in revenue and profit in the fiscal 2022-23, owing to stock market volatility and lower share transactions amid floor prices.

According to its FY23 financials, revenue fell by 25% to Tk238 crore, which is the lowest since the fiscal 2019-20.

Its net profit after tax declined to Tk80 crore, 35% lower than the previous fiscal year.

The securities regulator has allowed LankaBangla Finance to issue its fourth zero coupon bond worth Tk200 crore.

The publicly listed non-bank financial institution (NBFI) will use the money to lend to individuals, corporates and small and medium enterprises.

The discount rate of the privately placed, non-convertible, fully redeemable, unsecured bond will be between 9% and 10%, according to the Bangladesh Securities and Exchange Commission.

Unlike coupon-bearing bonds, where investors pay the principal and enjoy periodic interests until the issuer pays back the principal at maturity, zero-coupon bonds are issued at a discounted price and investors get back their principal amount with interest in equal instalments till the predetermined period.

For instance, investors can buy each unit of LankaBangla’s fourth zero coupon bond at Tk8.33 lakh and the principal amount plus interest will be paid back in six equal half-yearly instalments as the portion of the bond will be redeemed.

Zero coupon bonds are already popular among educated investors due to tax exemption the government offers against the income from the instrument.

Other than banks, NBFIs and insurers, income of any individual or corporate from zero coupon bonds is tax-waived in Bangladesh.

A corporation which pays around 40% tax on its net income will find the effective return from LankaBangla’s fourth zero coupon bond at a rate higher than 13%.

The bond will be issued to institutional and high net worth individual investors.

Green Delta Capital will be trustee and the issuer itself will be the arranger of the bond.

The privately placed instrument will be tradable on the Alternative Trading Board of the bourses.

Equity indices on Wednesday edged up for the second straight session as bargain hunters continued their chase for rumour-based scrips in anticipation of quick gains.

DSEX, the broad-based index of the Dhaka Stock Exchange (DSE), inched up 0.02% and settled at 6,262 compared to the previous trading session. Shariah index DSES and blue-chip DS30 also settled in green terrain reaching 1,367 and 2,099 respectively.

On Wednesday, the Dhaka bourse witnessed an increase in market participation as the daily turnover went up 32% to a week’s high of Tk689.4 crore, compared to the previous day’s trade.

Despite the market opening higher on Wednesday, sell pressure from cautious investors in the mid-session eroded the early gains and pushed the core index to settle flat by the end of the session, EBL Securities wrote in its daily market commentary.

Out of all the issues traded on Wednesday, 85 advanced, 82 declined, and 179 stayed the same as they were in the previous trading session.

Olympic Accessories was the most traded security, NCCBL Mutual Fund-1 the top gainer with a 10% appreciation, and Emerald Oil the top loser with a 5.3% correction at the DSE on Wednesday.

The port city bourse Chittagong Stock Exchange also settled in green terrain. Indices CSCX and CASPI advanced by 5.1 and 8.3 points respectively.