Sonargaon Textiles back to its losing streak

KEY FINANCIALS

• Recommended no dividend
• Tk3.72 loss per share
• NAV per share stood at Tk24.43
• Doubtful recovery of Tk11.6 crore receivables
• Last closing price of each share was Tk24.5

Sonargaon Textiles Ltd, following a profitable year that had signaled turnaround, has again posted a massive loss for the 2019-20 fiscal year.

The company announced no dividend for shareholders as it suffered a Tk3.72 annual loss against each of its shares, while in the 2018-19 fiscal the company posted Tk1.11 of earnings per share (EPS) and paid 3% cash dividends after many years.

In its filing with the stock exchanges recently, for its loss, the company blamed the adverse effects of Covid-19 and its factory closure of three consecutive months.

The company board also decided to keep the factory closed until further notice.

The company also wrote off some advance income tax. On top of this, it blamed some stock sale losses and the financial cost burden for its annual loss.

Lower sales and collection contributed to the company's decreased operating cash flow.

On 30 June, 2020, the company's net asset value per share decreased to Tk24.43.

Meanwhile, an external auditor has raised a red flag about the company's assets. In the opinion section of the latest annual report, the auditor said there is doubt over whether the company can recover all its receivables in business.

Thus, the company's Tk11.6 crore receivables are now in doubt.

The auditor also drew the attention of readers of the company's annual report to the company's ongoing legal proceedings with two financial institutions.

However, Sonargaon Textiles called shareholders to attend its next annual general meeting (AGM) online on 24 December at 11am.

Further, 25 November will be the record date for the AGM, when its shareholders will be identified.

The Kahn Sons Group textile venture was bold as it set up its factory in the Barishal region – instead of in an easier location like Chattogram or Dhaka. It came to the stock market in the mid-1990s.

However, poor performance in business pushed the company off-attention on the bourse before headlines appeared about its utility disconnection for nonpayment of bills in recent years.   

Promoters and directors collectively hold 44.55% shares of the company, 4.7% are held by institutional investors and over 50% shares are owned by the general public.

They are being deprived of dividends as the company even stopped announcing stock dividends after 2012 and following a long break it came up with a meager 3% dividend for 2018-19.

The share price of the company often catches fire on the bourses which is widely believed to be a part of manipulative attempts.

The last price for Sonargaon's shares was Tk24.5.