3 paper companies’ shares soar abnormally

Due to a long-time closure of educational institutions and a limited operation of government and private offices, the paper industry passes a crucial time as both sales and revenue fell drastically in the pandemic.

In spite of the crisis, three paper manufacturing companies' share prices soared abnormally during the last two months when their sales dropped.

In response to queries about the unusual price hike, the companies told the Dhaka Stock Exchange (DSE) that there was no undisclosed price sensitive information in this regard.

Including Bashundhara Paper Mills – the market leader of the paper industry – a total of six companies from the paper and printing sector are listed on stock exchanges.

Monospool Paper Manufacturing Company Limited and Paper Processing & Packaging Limited got re-listed on the stock exchanges from over-the-counter (OTC) market on 13 June this year.

Both companies are owned by the Bangladesh Development Group (BDG).

Another player of the paper and tissue industry, Sonali Paper & Board Mills, returned to the mainboards of stock exchanges on 26 July last year.

Two other listed companies are Hakkani Pulp & Paper Mills and Khulna Printing & Packaging.

On the companies' return to the maid boards, investors got hyped for regeneration of the companies from weak fundamentals on OTC platforms. As a result, these companies' share prices soared rapidly, say sources.

Professor Abu Ahmed, a stock market analyst and former teacher of the Dhaka University, told The Business Standard, "In recent times, some companies' share prices hiked abnormally without any fundamentals."

"Some investors, who are engaged in market manipulations, target specific scrips and then increase their share prices," he added.

According to the data available with DSE, in the last 66 days after its return to the main board, Monospool Paper Manufacturing's share prices soared by 200%, from Tk55 each on 13 June to Tk165.5 each on Wednesday.

Also, Paper Processing & Packaging Ltd's share prices soared by 838% to Tk165.2, from Tk17.6 each on 13 June.

Sonali Paper & Board Mills' share prices increased to Tk370.9 each on Wednesday, from Tk224.1 on 13 June.

"Investors should invest on the basis of a company's fundamentals, but when manipulators provoke them to invest in the targeted scrips for quick gains, a portion of investors fall into the trap," said Professor Abu Ahmed.

"The regulator should monitor how share prices rose although their financial situation is not good," he added.

Mostafizur Rahman, deputy managing director (DMD) of Bashundhara Group, has recently told TBS, "Most paper manufacturing companies in the country are now facing a crisis as lower demand of products. Some paper mills were closed due to the pandemic."

Financial state of the companies

The sales of Monospool Paper Manufacturing which manufactures ream papers, teleprinter rolls, computer papers, diaries, POS rolls, note books and A4 papers – has decreased by 43% and net profit fell by 44% in the first nine months of fiscal 2020-2021 compared to the same period of the previous year.

Its sales revenue stood at Tk23.46 crore and profit at Tk0.92 crore, which was Tk41.43 crore and Tk1.66 crore, respectively, in the same period of the previous year.

On Wednesday, its share prices closed at Tk165.5 each.

According to its website, its market share is 30% in printing and publication and 70% in converted stationery products.

The company said its business activities have been seriously affected due to pandemic closures of schools, colleges, universities till date.

Paper Processing & Packaging Limited produces exercise books, spiral pads, loose leaves, bound books, hardcover books, gift wrapping papers, envelopes and shopping bags.

According to its financials, in the July-March period of FY21, the revenue fell by 45% and profit by 87% compared to the same period of the previous year.

In the nine months, its revenue stood at Tk10.89 crore and profit Tk0.16 crore, which was Tk20.01 crore and Tk1.32 crore in the corresponding period a year ago.

The company said its business activities were affected. It expects the turnover will turn to a better position once the pandemic gets over.

Sonali Paper engaged in manufacturing of media, liner, and simplex, duplex board papers and quality writing papers. 

In the first nine months of FY21, its revenue decreased by 19% to Tk112.36 crore, from Tk138.74 crore in the same period of the previous year.

Although its revenue decreased, its net profit rose by 21% to Tk4.19 crore, from Tk3.46 crore in the corresponding period of the previous year.