DSE asks 50 cos to clarify submitted financial accounts
Thursday, 24 December 2009
Kayes M Sohel
The Dhaka Stock Exchange (DSE) has recently asked around 50 companies to clarify their submitted financial accounts in order to calculate their price-earning (PE) ratio on the basis of which credit might be disbursed by the lenders.
The move came against the backdrop of securities regulator's latest order that securities having PE ratio above 75 would not be eligible for getting margin loan.
As of Tuesday, the prime bourse so far updated PE ratio of more than 250 companies based on latest quarterly unaudited or audited reports to make them available for the merchant banks and brokerage houses to help disburse credit among their clients.
"We have asked the companies to clarify immediately their recent submitted quarterly accounts to help calculate PE ratio," Satipati Moitra, DSE chief executive officer, told the FE.
"Whether the submitted quarterly accounts are of three months or nine months are not clear to us, making it difficult to compute PE ratio," he said.
"As soon as we get clarification from a company, we disseminate it immediately on website to let the investors and lenders know," said Moitra.
Early this month, the Securities and Exchange Commission (SEC) directed merchant bankers, brokers and dealers not to disburse loan against equity securities having PE ratio over 75, a move seen to put lid on overvalued stocks.
The companies that have submitted quarterly accounts which are not clear to DSE are BRAC Bank, Green Delta Insurance, Aziz Pipes, Southeast Bank, Standard Insurance, Berger Paints, Social Islami Bank, Pubali Bank, Rupali Insurance, National Housing, Mercantile Bank, Northern General Insurance, National Tea, Rupali Bank, Meghna Life Insurance, Aramit, Dhaka Bank, Nitol Insurance, ACI Ltd, Mutual Trust Bank, Agrani Insurance, GQ Ball Pen, Jamuna Bank, Bangladesh General Insurance, Grameenphone, Uttara Bank, Federal Insurance, BD Service, IFIC Bank, Sandhani Life Insurance, Legacy Footwear, Standard Bank, Paramount Insurance, Sonargaon Textile, Fidelity Assets, Prime Insurance, Apex Footwear, Premier Leasing, Continental International Leasing, Republic Insurance, Phoenix Leasing, Bay Leasing and Industries, BIFC, First Lease International, BD Finance, People's Leasing, Uttara Finance and Union Capital.
The companies that have submitted third-quarter accounts for the period of three months but not submitted nine months accounts are Kay and Que (Bd.), Rangpur Foundry, BD Welding, Monno Fabrics, Information Services Network, In Tech Online, Eastland Insurance and Asia Pacific Gen Insurance.
A PE ratio is a company's current share price compared to its earnings per share. In general, a high PE ratio reflects that investors expect higher earnings in future or a strong chance that they will be able to make a capital gain. In other words, share value will increase and the investor is free to sell it at a rate higher than he paid for it.
The Dhaka Stock Exchange (DSE) has recently asked around 50 companies to clarify their submitted financial accounts in order to calculate their price-earning (PE) ratio on the basis of which credit might be disbursed by the lenders.
The move came against the backdrop of securities regulator's latest order that securities having PE ratio above 75 would not be eligible for getting margin loan.
As of Tuesday, the prime bourse so far updated PE ratio of more than 250 companies based on latest quarterly unaudited or audited reports to make them available for the merchant banks and brokerage houses to help disburse credit among their clients.
"We have asked the companies to clarify immediately their recent submitted quarterly accounts to help calculate PE ratio," Satipati Moitra, DSE chief executive officer, told the FE.
"Whether the submitted quarterly accounts are of three months or nine months are not clear to us, making it difficult to compute PE ratio," he said.
"As soon as we get clarification from a company, we disseminate it immediately on website to let the investors and lenders know," said Moitra.
Early this month, the Securities and Exchange Commission (SEC) directed merchant bankers, brokers and dealers not to disburse loan against equity securities having PE ratio over 75, a move seen to put lid on overvalued stocks.
The companies that have submitted quarterly accounts which are not clear to DSE are BRAC Bank, Green Delta Insurance, Aziz Pipes, Southeast Bank, Standard Insurance, Berger Paints, Social Islami Bank, Pubali Bank, Rupali Insurance, National Housing, Mercantile Bank, Northern General Insurance, National Tea, Rupali Bank, Meghna Life Insurance, Aramit, Dhaka Bank, Nitol Insurance, ACI Ltd, Mutual Trust Bank, Agrani Insurance, GQ Ball Pen, Jamuna Bank, Bangladesh General Insurance, Grameenphone, Uttara Bank, Federal Insurance, BD Service, IFIC Bank, Sandhani Life Insurance, Legacy Footwear, Standard Bank, Paramount Insurance, Sonargaon Textile, Fidelity Assets, Prime Insurance, Apex Footwear, Premier Leasing, Continental International Leasing, Republic Insurance, Phoenix Leasing, Bay Leasing and Industries, BIFC, First Lease International, BD Finance, People's Leasing, Uttara Finance and Union Capital.
The companies that have submitted third-quarter accounts for the period of three months but not submitted nine months accounts are Kay and Que (Bd.), Rangpur Foundry, BD Welding, Monno Fabrics, Information Services Network, In Tech Online, Eastland Insurance and Asia Pacific Gen Insurance.
A PE ratio is a company's current share price compared to its earnings per share. In general, a high PE ratio reflects that investors expect higher earnings in future or a strong chance that they will be able to make a capital gain. In other words, share value will increase and the investor is free to sell it at a rate higher than he paid for it.