Eastern Housing's stock price more than doubled in eight months in the bearish market, driven by its high profit growth in recent quarters that seemed to have boosted investors' confidence.
The country's lone publicly-traded realtor's share price soared 113 per cent to Tk 110.90 each share on Sunday, from Tk 52 on July 28 last year. The stock peaked at Tk 140 on October 16 last year.
Eastern Housing has dominated the market turnover and gainers' charts several times on the Dhaka Stock Exchange (DSE) in the past few months when a majority of stocks have been languishing at floor prices.
"A very few companies were able to make a profit in the recent quarters. Eastern Housing is one of those that might have helped boost investor confidence," said Sajedul Islam, senior vice president of the DSE Brokers Association of Bangladesh.
The company's profit rose 19 per cent year-on-year to Tk 293 million in the six months through December 2022, helped by the soaring prices of apartments and an increase in finance income from short-term deposits.
Its business performance stands out because the war-induced economic turmoil ate up profits of most other listed companies in July-December 2022; two major reasons were depreciation of the local currency against the dollar and high inflation.
Market operators say the profit growth of Eastern Housing encouraged investors to put fresh bets on its shares.
It is a commendable feat considering both the stock market trend and the overall scenario of the real estate sector.
Bangladesh's real estate sector has been passing through a tough time due to exorbitant price hikes of construction materials, according to industry insiders. The sales of regular properties and launching of new housing projects have slowed down amid the ongoing economic crisis.
Costlier raw materials pushed up prices of flats by Tk 1,500 to Tk 12,000 per square foot depending on the size and location, as per an assessment by the Real Estate and Housing Association of Bangladesh (REHAB).
Since the first wave of the pandemic, construction rod prices jumped 40 per cent to 50 per cent, which forced a large number of commercial building projects to go slow.
Sales of apartments came down to around 6,000 in 2022 from 10,000 in the previous year, according to realtors.
Company Secretary of Eastern Housing Salim Ahmed refused to comment.
However, a senior official requesting anonymity said the company had been cautiously advancing in construction work due to the abnormal price hikes of building materials. Presently, Eastern Housing is more focused on land development business than apartment projects.
The company has continued to purchase land at Jahurul Islam City in Aftabnagar for its second and third phase. It already purchased more than 65 bighas of land as part of its target to acquire 300 bighas of land for the two extended projects, the company official said.
Some building projects of the company are about to be completed, namely Suraiya Centre at Banani, Nabarun at Mirpur and Cascade at Banasree.
"We are very much selective for taking apartment projects," said Dhiraj Malakar, managing director of Eastern Housing in the latest annual report.
Business Performance
Eastern Housing, founded by legendary entrepreneur Jahurul Islam, began its journey in 1964 with a residential area development project at Pallabi in the capital and now it is engaged in both land development and apartment business.
Its sales revenue rose 25 per cent year-on-year to Tk 3.31 billion in the FY22 while profit soared 48 per cent to Tk 549 million.
The company attributed the record profit to the gain from selling a ready building in the capital's upscale area Gulshan at Tk 1 billion to a single buyer in the last fiscal year.
Its land sales rose by 8 per cent to Tk 2.01 billion and apartment sales 67 per cent to Tk 1.30 billion in the FY22. The Gulshan project alone helped increase apartment revenue by 70 per cent.
The company's sales revenue in the first six months of the current fiscal year, however, plunged 47 per cent year-on-year to Tk 1.01 billion. Its profit, however, grew 19 per cent.
The firm's finance income shot up by 140 per cent year-on-year to nearly Tk 1.20 billion in July-December 2022.
Challenges
The real estate sector is one of the fastest-growing sectors in the country. Urban population is expanding rapidly, raising demand for housing, office space, and other commercial property.
With the huge growth potential, this sector is entangled in issues, such as bureaucratic tangles to get permits from different state departments, increasing prices of construction materials, and a delay in getting utility connections.
Officials of Building Technology and Ideas ltd (bti), one of the top realtors in the country, say the approval of new housing projects has come down to one-third of what was before the passing of the new Detailed Area Plan (DAP) of the capital city.
The 20-year master plan was approved in July last year with the aim of turning Dhaka into a livable and modern mega city by 2035.
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