Deficit in confidence keeps big pharma low on bourses

BABUL BARMAN | Tuesday, 1 November 2022

Big drug makers have made no movement from floor prices on the Dhaka Stock Exchange for a while even after declaring good year-on-year profit growths in the year ended in June.
And the others are going down towards the floor.
Investors have a dent in confidence as the market has been passing through a bearish trend in the last few months, said DSE Brokers Association of Bangladesh's (DBA) former President Mostaque Ahmed Sadeque.
"Many companies declared lower-than-expected dividends despite significant profit growths, which disappointed investors," said Mr Sadeque, also managing director of Investment Promotion Services Ltd, a brokerage firm.
The pharmaceutical sector as a whole has seen its profit grow steadily in the last few years, riding on a jump in sales, launching of new drugs and stronger marketing strategies.
Among the major drug makers listed on the DSE, profits of Square Pharmaceuticals, Renata, ACI, Acme Laboratories, Beximco Pharma, IBN Sina, Beacon Pharma, and Navana Pharma rose between 1.40 per cent and 35 per cent year-on-year in FY 2022.
Square Pharmaceuticals declared 100 per cent cash dividend as its profit gained 14 per cent to Tk 18.18 billion for FY 2022.
Its share price has been stuck at floor price-Tk 209.8 -- for more than a month.
Renata, a manufacturer of human drugs as well as animal health products, logged Tk 5.11 billion in profit in FY 2022, with a 1.40 per cent rise from the previous year.
It has recommended 140 per cent cash and 7.0 per cent stock dividend. The stock has also not moved from the floor-Tk 1,303.2 -- since September 18.
Investors are not interested in buying even good stocks when stuck at floor prices. As many as 250 securities are at floor prices now.
"Price restriction is not a market-friendly move," said a merchant banker, requesting anonymity.
A majority of stocks languish at floor prices, freezing a huge amount of money at the capital market, he said.
Big buyers and foreign investors have been shying away from putting money in the market for the price restriction, local currency devaluation, and concerns over the looming macroeconomic situation, the merchant banker added.
Advanced Chemical Industries (ACI), one of the country's largest conglomerates and manufacturers of pharmaceutical products, raked Tk 380 million in profit in FY 2022, up from Tk 347 million a year ago.
The company declared 50 per cent cash and 5.0 per cent dividend for the year ended in June.
However, the stock closed near the floor price at Tk 273.20 on Monday.
Beacon Pharma's profit went up 8.30 per cent year-on-year to Tk 936 million in FY 2022. It declared 16 per cent cash dividend for 2022.
But the stock too is on the downward trend, having lost 18 per cent in the last four weeks.
ACME Laboratories declared 30 per cent cash dividend in FY 2022 as it records a 34 per cent higher profit year-on-year to Tk 2.11 billion. It disbursed 25 per cent cash dividend for the last fiscal year.
Similarly, Beximco Pharma and IBN Sina Pharmaceutical Industry gained a significant growth in income, inspiring considerable cash dividends for the year ended in June. But the stocks plunged closing in on floor prices.
Beximco Pharma's share price went down almost 20 per cent in a month.
The newly-listed Navana Pharma, which made debut on October 18, posted a 35 per cent profit growth from the last fiscal year.
The stock plunged 9.34 per cent on Monday after it shot 78.08 per cent the day before, driven by a corporate disclosure of 11 per cent cash dividend.

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