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Bangladesh Shipping Corporation falls on DSE even after outstanding profit growth

Investors frustrated with lower-than-expected return

Mohammad Mufazzal | November 03, 2022 00:00:00

State-owned Bangladesh Shipping Corporation (BSC) suffered a fall on the stock market on Wednesday as investors were frustrated over 20 per cent cash dividend that it declared for the fiscal 2021-22 even after making a remarkable 213.56 per cent year-on-year profit growth.

Ahead of the disclosure, the stock advanced in four sessions and declined in one session. By the end of the five consecutive sessions on Tuesday, the company's share price moved up 8.72 per cent to Tk 133.40 each on the Dhaka Stock Exchange.

But on Wednesday, the stock went down 0.52 per cent to Tk 132.70 on the premier bourse.

The company that operates ships on international sea routes watched its profit growth accelerate from 73.53 per cent to 213.56 per cent, compared with the previous fiscal year. As a result, its earnings jumped from just Tk 4.72 to Tk 14.80.

Experts said the company was able to gain the steep growth in earnings due to a significant rise in freight charges across the world.

"The BSC experienced a boost in profits as the global freight cost soared in the post-pandemic environment," said Md Moniruzzaman, managing director at the IDLC Investments.

However, the trend of the freight charges has recently reversed, which may leave an impact on the company's business growth in the ongoing fiscal year.

That might be the reason as to why the company saw its EPS sink by 8.29 per cent year-on-year to Tk 3.98 for the first quarter of the fiscal 2022-23, ended in September.

Over the dividend declaration, Mr Moniruzzaman said the dividend declared was depressing compared to the profit made.

The company's earnings growth for the fiscal 2021-22 was highest in three years.

Despite repeated attempts, officials of the BSC could not be reached for comment.

"By properly following the complex international regulations related to shipping, BSC management authority has been achieving commercial and technological excellence," said Bangladesh Securities and Exchange Commission in a disclosure.

The achievement was possible due to "timely decisions, strategies and actions, thereby increasing the company's income and controlling costs", it added.

The BSC's operating cash flow also rose significantly for the fiscal 2021-22 compared to the previous year.

The net operating cash flow per share was higher 86.77 per cent to Tk 23.78 for FY 2022 compared to a year ago.

Meanwhile, the company's board of directors has decided to purchase two crude oil mother tankers and two multipurpose mother bulk carriers.

According to the BSEC website, the number of ships in the company's fleet is 38.

Its share price remained almost flat before the first quarter of FY 2022-23. Then it rose sharply during the quarter.

The share price closed at Tk 105.70 each on July 28 and jumped to Tk 168.90 each on September 22. Afterwards, the share price fell gradually to Tk 122.70 each on October 22.

The government holds 52.10 per cent shares, institutes 24.30 per cent and individual investors 23.60 per cent until the end of September.

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