Investors interested in Sonali Paper

Optimistic investors have shown interest in buying shares of Sonali Paper and Board Mills Ltd. 

The company's shares have shown a positive trend on the first trading day, on Sunday, on the main market after 11 years. Share prices halted at 8.72 percent at the end of the day.

The number of the low paid-up company's free-float shares is 0.46 crore. 

On Sunday, buyers were interested in buying but sellers were not eager to sell at the existing price of the shares. So, frustrated buyers did not get more shares at the halted price.

The opening price was Tk296.80 and a total of 29,546 shares were traded at the stock exchanges on Sunday. Shares of Tk0.57 crore were traded in total.

Normally, investors are more interested in buying shares of low paid-up companies because of fewer numbers of free-float shares. If a company has fewer free-float shares, it is easy for investors to hike share prices unusually.

Earlier, the securities regulator punished some low paid-up companies and investors for an unusual price hike. 

Although its net profit has decreased, investors still want to buy the shares of Sonali Paper.

In the first nine months of the last fiscal year, the company's net profit was Tk3.46 crore, down from Tk5.23 crore, and earnings per share was Tk2.29 – down from Tk3.46 in the same period of the previous year.

In the January-March quarter, its net profit was Tk0.53 crore and earnings per share was Tk0.35.

The company's net asset value per share was Tk778.86 as of March 31 this year. The company now has a reserve and surplus of Tk488.14 crore, and its paid-up capital is Tk15.13 crore.

Earlier, the regulator permitted the stock exchanges to resume trading of the company's shares on the main market, subject to one-year lock-in of the shares of the existing directors of the company from the first day of trading.

On July 2 this year, low capital Sonali Paper and Board Mills was relisted on the main board of the stock exchanges. Both exchanges at their board meetings approved relisting  the company on the main board from the over-the-counter (OTC) market.

Sonali Paper primarily produces: white and printing paper, liner paper, simplex paper, and duplex paper. Its main competitors are Bashundhara Paper Mills, Hakkani Pulp, and Paper Mills, Karnaphuli Paper Mills, and Magura Paper Mills.

Sonali Paper is trying to cater to the rising demand for locally-manufactured paper. At present, the company's production capacity is 45,000 kilogrammes per day and 35,000 tonnes per year.

The company started in 1977 and was listed on the Dhaka Stock Exchange in 1985. In 2006, Younus Group took over the company after years of poor performance.

Sonali was ousted, along with other companies, in 2009 from the main board to the OTC market because of underperformance or nonperformance in business, its failure to hold shareholders' annual general meeting for years, and converting its own shares into electronic ones instead of paper certificates.

Since then, the new directors have been trying to bring the business back on track.