Share price of Hamid Fabrics is witnessing an unprecedented hike despite the company has reported huge losses recently for the year ended on June 30, 2021.
The fabrics-manufacturer recommended 5.0 per cent cash dividend only for general shareholders for the financial year (FY) 2020-21, down from 10 per cent cash dividend in 2019-20.
Hamid Fabrics reported that it incurred losses of Tk 160 million in 2020-21 after making profits of Tk 38 million in the previous year.
The company reported a loss of Tk 1.76 per share for the year ended on June 30, 2021 as against profit of Tk 0.42 per share for the same period a year earlier.
Its revenue has significantly decreased in the last fiscal year mainly due to the economic impacts of Covid-19, the company said in a filing.
The reduced profitability has severely affected the company's earnings per share. As such, the net operating cash flow has been affected due to lower revenue amid the pandemic.
Despite all this bad news, Hamid Fabrics saw its share price jump over 67 per cent on October 28 after the dividend declaration as there was a price limit on that day.
Since then, the company's share price has not stopped rising and soared 124 per cent within 10 trading days.
Besides, the company's share prices rose 7.16 per cent further on Tuesday to close at Tk 37.40. It was also the two years' highest closing price on the DSE.
"The company's stock price surge was completely abnormal," said an analyst at a leading brokerage firm, adding despite all this bad news, investors decided to buy the stocks as manipulators are trying to attract them by inflating the price.
Market analysts said the investors should be cautious about buying overvalued stocks in order to avert any misfortune.
Share prices of many companies are on the rise, although transaction and price movement of these companies' shares do not match their fundamentals, said a stockbroker.
He noted that some influential investors by disseminating rumours are trying to manipulate the prices of shares of the companies under question.
The investors need to be cautious and should not pay heed to any rumours related to companies and take their investment decisions prudently, he added.
Senior executives of the company could not be reached over the telephone.
Meanwhile, the company has informed that a meeting of the board of directors will be held on Thursday at 3:45pm to consider, among others, un-audited financial statements of the company for the first quarter (Q1) period ended on September 30, 2021.
The company's paid-up capital is Tk 910.57 million and authorised capital is Tk 2.0 billion, while the total number of securities is 91.05 million.
The sponsor-directors own 51.51 per cent stake in the company, while the institutional investors own 31.95 per cent and the general public 16.54 per cent as on September 30, 2021, the DSE data showed.
