Meghna PET shares soar 245% despite remaining shuts since 2002

The factory has remained closed for 24 years since 2002, while losses have continued to mount year after year. There is also no publicly disclosed information indicating that production will resume anytime soon.

Despite the company's deteriorating financial condition, Meghna PET Industries' recent share price tells a completely different story.

Over the past three months, the company's stock has surged by nearly 245%, raising the eyebrows of market insiders.

Meghna PET owns and operates an industrial plant for processing of integral mineral water, PET bottle manufacturing and filling of edible oil and selling of mineral water and edible oil. 

In the fiscal 2024-25, it incurred a loss of Tk4.40 crore with a per-share loss of Tk2.75, and did not recommend any dividends for its shareholders. 

According to data of the Dhaka Stock Exchange, in March, its share price was Tk24 apiece, which gradually rose to Tk82.9 yesterday.

Trading in the stock remained halted for the past two consecutive sessions. Although there were buyers at the maximum daily price limit, no sellers were available, the data showed.

Despite the sharp surge in the share price of the closed company, the lack of action from regulatory authorities such as the Bangladesh Securities and Exchange Commission and the DSE has raised questions among market participants.

A similar scenario is also seen in the case of Meghna Condensed Milk. The company has remained out of production since December 2021. 

Its retained loss as of June 2024 stood at Tk145 crore, surpassing its total assets of Tk140 crore. 

However, its stock has witnessed sharp price rallies in recent months, raising concerns among market participants over the disconnect between the company's fundamentals and its market performance.

On 18 January, Meghna Condensed Milk's share price stood at Tk12.1, while it closed at Tk46.1 yesterday, marking a 280% increase over the period.

Market insiders said a group of investors had targeted low-paid-up capital companies such as Meghna PET Industries and Meghna Condensed Milk because their relatively small number of outstanding shares makes it easier to drive up prices.

They alleged that some influential investors were spreading rumours about potential ownership changes and fresh investment that could restart operations at full capacity, despite production remaining suspended.

To inform the investors, the DSE published a list of closed firms in January this year. 

An official at the DSE, seeking anonymity, told TBS, "We can aware investors only about informing the status of the company. In line with the motto, we have already published a list of non-performing companies. Investors should invest at their own risk."

Al-Amin, a professor in the Department of Accounting at the University of Dhaka, criticised the apparent lack of regulatory action.

"The share price of a company that has been closed for 24 years is increasing in front of everyone's eyes. This clearly indicates that some group in the market is playing a role in driving up the price of this share," he said.

Prof Al-Amin added, "Even though the share price of a non-producing company is increasing, neither the BSEC nor the DSE is taking any initiative. There is negligence on the part of the regulatory bodies in investigating why the price is rising and taking necessary measures."

Questioning the adequacy of the exchange's response, he said it was important to consider whether the responsibility of regulators ended with the publication of a list of closed companies.

"In cases of companies with abnormal price hikes, the stock exchange or the commission can take action in the interest of investors, yet they are doing nothing," he added.

Attempts to obtain comments from BSEC spokesperson Abul Kalam were unsuccessful, as he did not respond to telephone calls.