Himadri Ltd, which operates six potato cold storage facilities in northern Bangladesh, has been flying high on the SME board of the Dhaka Stock Exchange without any valid reason.
The little-known SME stock skyrocketed 783 per cent in just seven weeks to Tk 311.90 on Thursday, becoming the second highest expensive stock in the platform.
Its rise began after it got listed in the Chittagong Stock Exchange (CSE) in April this year. At the time, the stock price was Tk 35.30.
Himadri was one of the six companies to join the SME board on September 30, 2021, having transferred from the over-the-counter (OTC) market. Currently, 16 companies are listed on the platform.
The abnormal price surge of Himadri has raised suspicion among market analysts of stock price manipulation.
"As the number of shares of SMEs is low, share prices of these companies rose fast," said Abu Ahmed, a former professor of economics department at the University of Dhaka.
He said investors have to be careful while putting their money in such stocks.
The p[rice surge also prompted the DSE to serve a show-cause notice asking the company if there was any reason behind the unexpected rally.
The company came up with a knee-jerk response, saying there was no such information, except that three directors sold a small number of their shares of the company through the CSE.
Himdari's total number of shares is only 0.75 million, while more than 98 per cent are held by sponsor-directors.
Meanwhile, the company's net profit increased 68 per cent year-on-year to Tk 37.95 million in July-December 2022.
Incorporated in 1974, it operates potato cold storage facilities in Rangpur, Bagura, Joypurhat, Thakurgaon, Gaibandha, and Dinajpur.
Another SME stock --- Yusuf Flour Mills -- also saw an unusual price hike after dividend declaration in November last year.
Its stock price jumped almost 23 times in a single day to Tk 594.40 from Tk 26.10 after the corporate declaration as there was no circuit breaker for the stock that day.
The company's stock price reached as high as Tk 2,884 in December last year.
Although its stock price gradually declined to Tk 1036.80 until Thursday, it is still high.
Yusuf Flour declared 10 per cent cash dividend for the year ended in June 2022.
A small volume of shares is what was behind the artificial price increase, said Mr Ahmad.
Yousuf Flour's paid-up capital stands at Tk 6.07 million and the total number of securities is only 0.60 million.
Share trading on the SME platform started on September 30 last year, creating an opportunity for small and medium enterprises (SMEs) having a paid-up capital between Tk 30 million and Tk 50 million to raise capital from the primary market.
Initially, the securities regulator did not allow general investors to trade on the SME board without prior permission considering the 'risk'. The minimum investment requirement was Tk 50 million in listed securities of the main board to trade on the SME board.
But due to the absence of general investors, the stock prices of the SME companies had remained low, and most of the shares were in the hands of institutional investors.
This prompted the securities regulator in February last year to relax the requirement, saying if an investor has an investment of Tk 2 million in listed securities of the main board, they can make trading on the SME board.
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