SEC in Beximco Straightjacket IPP Deals Requires Review
Total Page：16
File Type：pdf, Size：1020Kb
BANGLADESH th Weekly Market Review 167 Issue May 04, 2002 SEC in Beximco straightjacket IPP deals requires review Immediately after Beximco Group, the largest conglomerate A committee on independent power plants (IPP) recommended with 11 listed companies and having over 10% of the market immediate revision of and amendments to the agreements capitalization, declared low dividends, in a knee-jerk alacrity signed with private power generation companies. It identified the SEC ordered trading suspension of the companies at the inconsistencies and provisions discriminatory to the interest of bourses alleging ‘incomplete declaration’. Only three of their the state-owned energy agencies. Allowing duty-free import of companies declared 10% dividend, seven 5%, while one, plant, machinery and equipment, vehicle, air conditioners, Shinepukur Holdings, declared none, all without announcing furniture, subsidized gas price, etc pushed the state-run power the AGM and book-closure dates. Reacting to the call for generation agencies, which do not enjoy such concessions, into explanation, the Beximco group served the SEC with a legal an unfair competition. So far some 9 IPPs generate 1,331mw notice challenging the action and threatening to take the electricity, which is sold to the Power Development Board (PDB) matter to court if suspension is not withdrawn within the next and Rural Electrification Board (REB) at much higher rates. seven days since SEC failed to show similar due diligence in Meanwhile, the PDB is in deep red incurring more than Tk 2.0b taking any action against similar default by a number of other losses annually for past few years. It sells power to REB, DESA companies. They also challenged the constitutionality of the and the agricultural sector at much below production and law (newly inserted Section 2CC of the Securities & Exchange transmission costs. PDB spends Tk 1.49 for generation and Tk Ordinance 1969) under which SEC assumed such pervasive 0.49 for transmission of every unit of power (total Tk 1.98), powers that is being used arbitrarily without any impact which it sells at Tk 1.84 making a loss of Tk 0.14 per unit. It assessment. Meanwhile, the institutional investors, including has to spend Tk 2.28 per unit for supplying power to REB at a the state-owned ICB and AIMS as well as the bourses, at a price of Tk 1.77, making a loss of Tk 0.51 per unit. For discussion with the SEC vented their concern and frustration supplying power to the agriculture sector, PDB spends Tk 3.79 at the development and advised immediate withdrawal of the per unit at a price of Tk 1.82 only, incurring a loss of Tk 1.97 suspension orders since it is hurting the investors and per unit. But the preposterous price difference comes into play distorting the natural market behavior. The Bangladesh when it buys power from the independent power plants (IPPs). Association of Listed Companies also termed the SEC move PDB buys from them at Tk 4.08 per unit, while it can produce illegal and market unfriendly. Though the SEC claimed the at Tk 1.40 only. The Committee suggested power purchase move proper, timely and legal, it has now authorized the rates be refixed and project tenure enhanced to 25 and 20 years bourses to withdraw the suspensions if the companies from the existing 22 and 15 years, to save Tk 2b annually. announce the AGM and book-closure dates. The market reacted negatively on the dividend announcement and SEC FBCCI calls for restructuring SEC move, with selling pressures across the board. The Federation of Bangladesh Chamber of Commerce and Gas utilization finalized in three options Industries (FBCCI) has called for immediate restructuring of the Securities & Exchange Commission (SEC) and The national committee on gas utilization finalized the report appointment of adequately qualified skilled professionals from with three options including the pipeline export. Instead of the private sector to address the languishing problems of the emphasizing any specific option, the committee has decided to stock market. With dearth of relevant experience and clueless outline the financial pros and cons of all options to enable the ideas the SEC has made some rules and regulations that only government to make its own decision. The first option suit an advanced market and not at the stage of development suggests ‘domestic utilization’ through power, fertilizer, of the Bangladesh market, they stated. The trade body petrochemical, LNG and CNG forms, which will require $200m recommended for a committee with representatives of the to implement. The second option goes for ‘pipeline export’ market operators to review the rules, reactivation of the advisory which would let the country earn $200-300m a year from committee of the SEC to develop policies, allow companies to fourth year. It would however open opportunities for all international oil companies (IOCs) now operating in issue commercial papers, allow utility companies to issue Bangladesh to participate in the pipeline export venture. The shares and take some other reform measures. Meanwhile, the third option advises generation and export of electricity by Chittagong Stock Exchange has also formally placed similar utilizing gas, which is however financially less attractive. proposals to the Finance Minister, emphasizing on restructuring the SEC and other reform measures to salvage Dhaka to seek OCR facility from ADB the capital market through regaining the lost public confidence. Bangladesh will approach the Asian development Bank (ADB) ADP trimmed by Tk 30b for financial assistance from the Ordinary Common Resources (OCR) facility, which usually bears an annual interest rate The Executive Committee of the National Economic Council between 3-4%, as soft loan became difficult to come by and (ECNEC) has approved a Tk 30b cut from the Annual supplier’s credit is too costly. This was revealed during a Development Program (ADP) for the current fiscal year. It has discussion with the Finance Minister and the visiting ADB trimmed the development budget to Tk 160b from original Tk Executive Director Mr. P.G. Mankad. ADB’s assistance would 190b to match expenditure with the availability of resources. be sought for installation of new power plant and rehabilitation The original ADP, continuation of the expansionary policy of of the existing transmission and distribution system and for the past government, became unrealistic due to low level of locomotive engines, signaling net and railway tracks. The ADB revenue collection. The IMF was also urging the government is one of the largest financiers of such projects in Bangladesh. to cut budget deficit through slashing the ADP. A S S E T & I N V E S T M E N T M A N A G E M E N T S E R V I C E S O F B A N G L A D E S H L I M I T E D Chandrashila SuvastuTower (5th floor), 69/1 Panthopath, Dhaka 1205, Bangladesh Tel : (+88-02) 862 1821-3; Fax : (+88-02) 862 1109; e-mail : [email protected]; web: http://www.aims-bangladesh.com Safko Spinning 75 83 -9.64 1,198,733 This week’s data runs from Apr 24, 2002 to May 02, 2002 Stock Market Movement This Week Last Week +/- % DSE General Index 759.01 769.83 -1.41 Average Daily Turnover,Tk 106,529,445.50 76,594,475.43 39.08 Market Capital,Tk 60,072,976,414. 61,049,211,843. -1.60 Market PEx* 7.2400 00 Market PBRx* 1.02 Market EPS, Tk per Tk100* 27.42 Market Dividend Yield,%* 8.56 * PE is based on latest reported data of listed companies which registered positive earning, PBR is based on latest reported book values, companies with negative book value have been excluded. The companies earmarked as 'B' and 'Z' category by SEC have also been excluded from calculation. **1 year Holding Period Yield Top Gainers Average Price(Tk) Company This Last Change Avg. Daily Week Week % Turnover, Tk Metalex Corporation 88 80 10.00 293 Pragati Insurance 439 410 7.07 75,713 Therapeutics 36 34 5.88 542 Chittagong Cement 609 576 5.73 1,925,051 Dhaka Vegetable 19 18 5.56 32 Pharmaco 20 19 5.26 7,243 National Polymer 148 142 4.23 2,702 BATBC 77 74 4.05 843,442 Desh Garments 65 63 3.17 433 National Tea 569 552 3.08 133,768 Top Losers Average Price(Tk) Company This Last Change Avg. Daily Week Week % Turnover, Tk Saleh Carpet 1.90 2.30 -17.39 26,900 Dhaka Bank 386 453 -14.79 223,667 Gem Knitwear 19 22 -13.64 8,300 Tallu Spinning 70 81 -13.58 1,508 Gachihata Aquaculture 21 24 -12.50 42,892 Ambee Pharma 37 42 -11.90 114,975 Rahman Chemicals 16 18 -11.11 82 Modern Industries 48 54 -11.11 2,153 Paragon Leather 17 19 -10.53 10,283 Sonali Paper 4.50 5.00 -10.00 150 Top Turnover Companies Average Price(Tk) Company This Last Change Avg. Daily Week Week % Turnover, Tk Beximco Pharma 41 42 -2.38 6,145,367 Meghna Cement 314 311 0.96 4,661,175 Chittagong Cement 609 576 5.73 1,925,051 1st BSRS MF 100 110 -9.09 1,836,175 Eastern Cables 155 164 -5.49 1,765,560 Padma Oil 176 176 0.00 1,683,733 Rangpur Foundry 20 21 -4.76 1,536,583 Prime Bank 290 290 0.00 1,384,242 Sinobangla 18 19 -5.26 1,229,000 A S S E T & I N V E S T M E N T M A N A G E M E N T S E R V I C E S O F B A N G L A D E S H L I M I T E D Chandrashila SuvastuTower (5th floor), 69/1 Panthopath, Dhaka 1205, Bangladesh Tel : (+88-02) 862 1821-3; Fax : (+88-02) 862 1109; e-mail : [email protected]; web: http://www.aims-bangladesh.com Technical Talk Beximco fever jolts the market Poor dividend disclosures by Beximco group, the largest conglomerate, and suspension of trading of their 11 listed companies by the SEC sent a shock wave across the market.