The share price of the state-owned Zeal Bangla Sugar Mill is soaring despite the company is incurring huge losses and not giving any dividends for many years.
The stock price of the loss-making sugar mills, listed with the bourses in 1988, jumped over 38 per cent to Tk 151.9, from Tk 113.2 in a span of just one week.
The company, which has been incurring losses over the years, has once again recorded a jump in its stock price.
All financial indicators of the company such as earning per share, net operating cash flow per share and net asset value per share are negative.
The company has reported net loss of Tk 222.54 million for July-December 2021, as against loss of Tk 221.16 million in July-December 2020.
Zeal Bangla Sugar incurred a loss of Tk 37.09 per share for July-December 2021, as against loss of Tk 36.86 per share in the same period a year earlier, according to the Dhaka Stock Exchange (DSE).
In spite of poor performance in business, its unusual price movement prompted the market regulator to suspend the trading of Zeal Bangla stocks for a month in 2020.
Market insiders blamed price manipulation due to a small volume of shares being behind the artificial crisis.
The company's paid-up capital is very low, making it a target for gamblers seeking to manipulate trading, said a merchant banker preferring anonymity.
A company having low paid-up capital means the number of shares it has in the market is relatively small. Gamblers target these stocks as it is easier to carry out the manipulation.
Its paid-up capital stands at Tk 60 million while total number of securities is 6.0 million.
Basically, Zeal Bangla has been in losses due to corruption, lack of raw materials and inadequate production despite its high capacity to run smoothly, he said.
Some companies with low performance records made their way into the top gainers' list of the DSE frequently, riding on a rumour that the gamblers are putting money in the securities.
Some influential investors by disseminating rumours are trying to manipulate the prices of shares of many companies, said an analyst at a leading brokerage firm.
The investors are blindly chasing its stock without conducting any proper analysis, as they see continuous rise in values, he said.
"If these stocks face corrections, general investors will be the ultimate losers, which will dent their confidence," he said.
The government owns 51 per cent stakes in the Zeal Bangla Sugar Mills, while the institutional investors own 12.09 per cent and the general public 36.91 per cent as on December 31, 2021, the DSE data showed.
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