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6 cos under extended credit facility aimed at reenergising market

S. Alam Cold Rolled Steels in the list of marginable stocks even after losing its position under 'A' category

MOHAMMAD MUFAZZAL | May 18, 2023 00:00:00

Only six companies fall under the extended coverage of credit facility that has recently been revised to boost liquidity flow into stocks.

The move is expected to give new momentum to the sluggish markets.

The Bangladesh Securities and Exchange Commission (BSEC) has issued an order allowing margin loans for investment in companies with price-to-earnings (P/E) ratio greater than 40 but below 50.

Earlier, the credit facility was limited to companies with P/E ratio of 40 and under.

The newly-included marginable stocks must have minimum paid-up capital of Tk 300 million and must have been listed under category 'A' for the last three years.

The companies that get the extended loan coverage are Bangladesh Steel Re-Rolling Mills, Saif Powertec, aamra technologies, Fortune Shoes, United Insurance Company, and S. Alam Cold Rolled Steels.

Their paid-up capital is between Tk 647 million and Tk 3.79 billion where the P/E ratio ranges between 40.66 and 49.7.

Only Bangladesh Steel Re-Rolling Mills (BSRM) has foreign investors who own 17.29 per cent shares of the company.

Among the companies, aamra technologies has swung on the Dhaka Stock Exchange for the last two years without getting stuck at floor.

Its share price more than doubled to Tk 56.90 between the third week of May 2021 and the first week of November last year.

Later, the stock slid to Tk 39 by November last year. It closed at Tk 37.30 on Wednesday. The company's EPS rose to Tk 1.78 in FY22, riding on cost effective operations.

BSRM with a paid-up capital of Tk 2.99 billion has been an 'A' category stock since 2018 and distributed dividends between 15-35 per cent.

The stock has been languishing at the floor price of Tk 90 since the end of October last year. Its P/E ratio remained at 40.66.

BSRM displayed a remarkable growth in profit in FY21. Its EPS rose to Tk 18.96 in FY21 from Tk 3.90 a year ago. Then EPS dropped to Tk 10.34 in FY22 due to reduced sales caused by inflation, costlier raw materials and devaluation of the local currency.

The paid-up capital of Fortune Shoes is Tk 1.71 billion and the company has been in 'A' category since 2022 distributing 10-15 percent dividends to its shareholders.

The shoe maker has been stuck at the floor price of Tk 75.70 since December 22, last year. Its P/E ratio is 46.16.

The company saw a significant growth in income in FY22 compared to the previous fiscal year. Its EPS jumped more than 50 per cent from FY21 to FY22.

Another company Saif Powertec has been in the 'A' category since 2014 distributing dividends between 10-33 per cent.

Its share price has not moved from the floor price of Tk 30.40 since November 9, last year except for in one session on January 17. Its P/E ratio stands at 43.68.

United Insurance Company with a paid-up capital of Tk 3.79 million has been in 'A' category since 2014. It has paid out dividends between 10-33 per cent. The company gave higher amounts of stock dividend than cash dividend for many years.

The stock has remained static at Tk 29.70 since November 10, 2022. Hence P/E ratio too remained unchanged at 43.68.

If the companies' recent quarterly growth performance is considered, BSRM performed best in January-March this year. It overcame loss of the previous two quarters.

The company's nine-month consolidated profit was Tk 495 million whereas it incurred a loss of Tk 1.10 billion in the first two quarters.

Aamra technologies saw a year-on-year marginal decline in profit to Tk 10.35 million in the third quarter of FY23 because of a fall in revenue and increase in financial expenses.

Fortune Shoes observed an 80 per cent year-on year fall in profit to Tk 15.36 million in the latest quarter.

Saif Powertec has not yet released its financial reports for January-March, FY23.

United Insurance saw a 29 per cent year-on-year decline in EPS to Tk 0.22 in the quarter ended in March this year.

The Dhaka Stock Exchange (DSE) has included S. Alam Cold Rolled Steels in the list of marginable securities under the revised criteria though it has been downgraded to category B for giving less than 10 per cent dividend for FY22.

The company's paid-up capital is Tk 983.71 million and P/E ratio is 49.7.

Spokesperson of the securities regulator Mohammad Rezaul Karim said that to be considered as marginable a company must secure its position in 'A' category at present having met the other requirements.

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