Gamblers having field working day with off color Central Pharma stocks
Stocks of Central Pharmaceuticals almost doubled within the last 1 month even though its production of handful of drugs have been on pause within the last three months.
On the other hand, earnings per share (EPS) of the company is also deteriorating. Its EPS dropped 75 per cent to Tk 0.11 found in the first 50 percent of the existing financial year.
In response to a notice from the Dhaka Stock Exchange the drug maker yesterday informed that its production has been suspended since December 5 this past year as the Directorate General of Drug Administration temporarily scrapped its licence of production of few drugs.
However, no bad news was able to give up the curious abnormal rise of the medicine maker's stock price.
In the span of 1 month it rose 97.67 per cent to Tk 17. Yesterday, it advanced 9.68 per cent regardless of the notice posted on the DSE website.
The increase is merely due to gambling by some individuals, said a stock broker preferring anonymity.
People are purchasing the stocks to be able to create a great artificial demand and cost hike in order that general investors are used.
"When the overall investors will buy the shares the gamblers will sell," he explained, adding that the Bangladesh Securities and Exchange Commission (BSEC) and the Dhaka STOCK MARKET have surveillance software separately that may detect everything.
This begs the question why the two bodies aren't forbidding the big buyers from jumping right into a profit declining company, he added.
Based on the DSE info, the drug maker's gains and income has been waning since its listing in 2013.
The drug makers' turnover dropped 53.47 % to Tk 30.74 crore in the 2018-19 financial year weighed against the 2014-15 financial year.
Its profits declined at the same rate therefore did its stock value.
"We can not ask an investor why they are purchasing the stock of a good company whose profits are shrinking," stated a high official of the BSEC requesting never to be named.
Investors should be wary of what they are shopping for and what returns they'll get them.
A merchant banker said whenever a firm rises abnormally and some people choose the stocks it is obviously as a result of bad intentions.
"As a result, the BSEC should see them and punish them to avoid the gambling. Otherwise, stock investors' confidence will not return to the market," he added.
Mansur Ahmed, managing director of Central Pharmaceuticals, didn't answer to telephone calls from The Daily Superstar.