The auditor of the Oimex Electrode gave qualified opinion on the company's financial statements for fiscal year (FY) 2022, saying that the liability amount of the company could not be confirmed due to non-availability of details of tax base.
The auditor's report also highlighted several other inconsistencies, saying that the company's fixed assets could not be identified due to lack of updated records, existence, completeness and accuracy.
Furthermore, Oimex suffered losses in FY 2022 and the subsequent three quarters in FY 2023.
Despite these non-compliances and financial losses, the share price of the manufacturer of nails and galvanized wire surged by 48 per cent in the last one month on the Dhaka Stock Exchange (DSE).
Such a huge increase in the company's share price has now attracted regulatory scrutiny.
On Monday, the Bangladesh Securities and Exchange Commission (BSEC) instructed the Dhaka Stock Exchange (DSE) to initiate an investigation to determine if any fraudulent activities were behind the price surge.
DSE, the premier bourse, will have to complete the investigation within 20 working days from the issuance of the order, said BSEC Executive Director Mohammad Rezaul Karim.
He further stated that the DSE has been tasked with determining whether any instances of insider trading occurred in relation to the big jump in the company's share price.
Insider trading takes place when a section of company officials purchase securities based on the inside information that is yet to be made public.
From January 16 to April 24, the share price of Oimex exhibited fluctuation, ranging between Tk 17.10 and Tk 16.10.
On May 7, the share price reached Tk 18.50, after which it experienced a sharp rise and closed at Tk 27.20 on Tuesday, registering an increase of 48 per cent on the DSE.
In light of the prevailing circumstances, the securities regulator has asked the Dhaka Stock Exchange (DSE) to carry out an investigation into the unusual price kike.
Earlier, in response to a query, the company informed the DSE on May 17 that there is no undisclosed price sensitive information regarding the unusual price hike and increase in volume of shares traded.
BSEC Executive Director Mr. Karim said investors should exercise caution and refrain from investing in companies without good fundamentals just considering the sudden and abrupt price hikes in the shares.
"They (investors) should consider the companies' fundamental base for the protection of their own investments," he added.
Oimex Electrode incurred a loss of Tk 110.84 million in FY 2022 due to a drastic fall in its revenue income.
It distributed only 1.0 per cent cash dividend among general shareholders other than sponsors and directors for FY 2022. However, it did not pay out any dividend for FY 2021.
The company's profit gradually declined during the period from FY 2018 to FY 21 and finally reported a loss for FY 22.
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