Stocks
SK Trims’ Bank Accounts Frozen Amid Corruption Probe
The Bangladesh Financial Intelligence Unit (BFIU) has frozen the bank accounts of SK Trims and Industries, a publicly traded company allegedly owned by the family of former National Board of Revenue (NBR) official Matiur Rahman. This action follows court orders and a recommendation from the Anti-Corruption Commission (ACC), as disclosed today on the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) websites.
Key Figures and Investigation
Media reports indicate that MA Kaium Howlader and Md Nurul Huda, brothers of Matiur Rahman, hold significant positions in SK Trims, serving as Managing Director and Sponsor Director, respectively. The ACC is currently probing Matiur Rahman’s assets on allegations of amassing illegal wealth.
On July 11, a Dhaka court mandated the freezing of 116 bank accounts and 23 beneficiary owner (BO) accounts, along with the seizure of multiple properties belonging to Matiur Rahman and his family.
Company Disclosure and Response
In a recent disclosure, SK Trims confirmed that the Metropolitan Sessions Judge Court and the BFIU had frozen all their bank accounts based on the ACC’s recommendation. Efforts to reach Md Riaz Haider, the company secretary, and Md Nazmul Hossain, the Chief Financial Officer (CFO), for comments were unsuccessful.
According to SK Trims’ annual report for 2022-23, the company maintains over a dozen bank accounts across various banks, including fixed deposit receipts (FDRs), loans, and other accounts critical for its business operations.
Stock Market Performance and Financial Impact
SK Trims was listed on the stock exchange in 2018, raising Tk30 crore through an initial public offering (IPO) to expand its business. The company’s share price has fluctuated significantly following allegations against Matiur Rahman. From Tk27.6 per share on June 20, it fell to Tk24.4 on July 2, then briefly rose to Tk27 on July 9, before declining again, closing at Tk24.8 on the DSE yesterday.
Business Operations and Investments
SK Trims specializes in manufacturing various products for the export-oriented garment industry, including sewing thread, elastic, poly, cartons, photo cards, backboards, barcodes, hang tags, tissue paper, and gum tape.
The company has invested Tk17 crore in seven companies as of June 30, 2023. Among these, Dominage Steel Building Systems, Mamun Agro Products, Acme Pesticides, and Asiatic Laboratories are listed on the bourses, while Anik Trims, B Brothers, and Banbiz (Pvt) remain non-listed. It is unclear whether SK Trims has sold or still holds shares from these investments.
Revenue and Profit Growth
SK Trims reported a 40% increase in revenue to Tk92 crore for the first nine months of the 2023-24 fiscal year, with net profit soaring by 86% to Tk8.81 crore. These figures surpassed the company’s annual revenue and profit of Tk88.75 crore and Tk7.97 crore, respectively, for the 2022-23 fiscal year. The company paid a 3% cash dividend to its shareholders in FY23 and its shares are currently trading in the B category.
As of June 30, sponsor-directors held 31.23%, institutional investors 28.86%, and the general public 39.91% of the company’s shares.
Industry Concerns
Ziaur Rahman, General Secretary of the Benapole Landport Importers and Exporters Association, expressed concerns over the significant losses traders face with perishable food products due to halted trade services. “Since the goods trucks cannot enter after the evening, the trade deficit will increase,” he noted.
Asian investors trod cautiously Monday as they struggled to build on recent equity gains, with debate swirling around how big an expected US interest rate cut will be this week, while sentiment was being dragged by worries about the Chinese economy.
The yen edged to a new high since December ahead of the Federal Reserve decision on Wednesday and a policy meeting at the Bank of Japan two days later.
Data showing US inflation slowed more than expected last month to its weakest pace since February 2021 has sparked fresh talk that Fed officials will announce a bumper 50-basis-point cut and continue easing into the new year.
However, while bets on such a move have risen, some analysts warned that it could send a signal that decision-makers are worried about the economy, particularly after two readings showing the labour market was softening.
While bank officials have played their cards close to their chest, they have hinted that they are willing to discuss a bigger cut, while former New York Fed chief Bill Dudley said he thought “there’s a strong case for 50”.
Michael Krautzberger at AllianzGI said: “The Fed, like other central bankers, are now focused on economic growth rather than inflation risks and becoming increasingly worried about being behind the curve on policy — cutting rates too late to avert a recession or sharper growth slowdown.
“Therefore, in our view, the risks of larger rate cuts at subsequent meetings this year cannot be discounted, especially if labour market activity deteriorates faster than currently expected and inflation continues to head towards target.”
All three main indexes on Wall Street pushed higher Friday, with the Dow and S&P 500 within a whisker of their record highs.
But Asian investors were unable to extend the rally, with Hong Kong, Singapore and Wellington down but Sydney, Taipei and Manila edging up.
Trade was muted by holidays in Tokyo, Shanghai, Jakarta and Seoul.
On currency markets the yen hit 140.43 per dollar, its strongest level since the end of December, while gold remained at all-time highs after hitting a record $2,586.10 per ounce Friday.
Traders are keeping tabs on developments in China after more weak data on credit, retail sales, industrial production and house prices stoked concerns about the state of the world’s number two economy.
The figures “collectively add to concerns that policy measures announced in recent weeks and months have so far failed to have any measurable impact in lifting economic growth thus far in the third quarter after the weak second quarter performance”, said National Australia Bank’s Ray Attrill.
He added that investors will be keenly watching the government’s upcoming Politburo meeting — the date of which has yet to be set.
In light of the latest batch of disappointing figures, the central bank outlined plans to support the economy, saying it will “make maintaining price stability and pushing for the mild rebound in prices an important consideration for monetary policy and meet reasonable financing demand for consumption in a more targeted way”.
The Fed’s decision is set to be followed by the BoJ on Friday, with most analysts expecting it to hold rates after a surprise hike at the end of July sparked turmoil on markets.
“A consecutive hike would likely be seen as too aggressive, especially given criticism that the BoJ’s hawkish stance contributed to global market turbulence in early August,” said IG analyst Tony Sycamore.
“That said, stronger-than-expected inflation and wage growth in Japan over the past month have given the BoJ confidence in a wage-price cycle that could keep inflation above two percent, paving the way for more policy tightening.”
– Key figures around 0230 GMT –
Hong Kong – Hang Seng Index: DOWN 0.6 percent at 17,271.92
Tokyo – Nikkei 225: Closed for a holiday
Shanghai – Composite: Closed for a holiday
Dollar/yen: DOWN at 140.53 yen from 140.76 yen on Friday
Euro/dollar: UP at $1.1088 from $1.1079
Pound/dollar: UP at $1.3141 from $1.3125
Euro/pound: DOWN at 84.37 pence from 84.40 pence
West Texas Intermediate: UP 0.5 percent at $68.98 per barrel
Brent North Sea Crude: UP 0.4 percent at $71.86 per barrel
New York – Dow: UP 0.7 percent at 41,393.78 (close)
London – FTSE 100: UP 0.4 percent at 8,273.09 (close)
Khan Brothers PP Woven Bags has raised eyebrows after a significant and unexpected surge in its share price, despite the company posting losses and not declaring dividends for the last two fiscal years, including 2022-23. Over a brief period of just 14 trading sessions, from 25 August to 15 September, the company’s stock saw an extraordinary rise of 150%, closing at Tk176.2 on Sunday.
In light of this unusual price movement, the Bangladesh Securities and Exchange Commission (BSEC) has requested the Dhaka Stock Exchange (DSE) to conduct an investigation. The BSEC noted suspicious fluctuations in both the price and trading volume of Khan Brothers’ shares and called for an inquiry to uncover possible causes, including potential market manipulation or insider trading.
The DSE is required to submit a detailed investigation report to the BSEC’s Surveillance Department within 30 working days. Furthermore, the exchange has been directed to alert its AR/Compliance Officer or CEO of any irregular trade activities that may point to violations of securities regulations.
This is not the first time Khan Brothers’ shares have seen a steep rise. Earlier this year, in mid-February, the stock price surged to Tk231 before dipping below the face value of Tk10 by April. On 25 August, the shares traded at Tk78.4, only to climb again and hit Tk176.50 on Sunday, representing a 5.94% increase, or Tk9.9 per share.
Despite the sharp rise, the company reported a loss of Tk20 lakh during the first nine months of the 2023-24 fiscal year. Previously, the DSE issued query notices regarding the stock’s rising price on 10 July and 1 September. The company responded that no undisclosed price-sensitive information existed to explain the surge.
Khan Brothers PP Woven Bags Industries, which went public in 2014, raised Tk20 crore through its listing to fund machinery purchases, building construction, and debt repayment.
Dhaka Stock Market DSE, Bourse on the first working day of the week, 15th September, ended with a mixed performance in Indices and hike in Turnover from the previous working session. This information is known from DSE sources.
668 crore 95 lakh taka shares were traded on this day. 64 crore 43 lakh less tradings were done in DSE today compared to the previous workday, 12th September, Shares worth Tk 733 crores 39 lakh shares were traded last time, Thursday.
The benchmark DSEX lost 14.74 points or 5,726 The Shariah-based index DSES gained 1 point or 1,246 and the blue-chip index DS30 decreased by 15.22 points or 2,085.
Of the issues traded, 169 advanced, 182 declined and 46 remained unchanged.
SK Trims & Industries Limited ranked top gainer on DSE, the share price increased by Tk 1.70 paisa or 10.00 percent. On this day, the share was last traded at Tk 18.70 paisa.
Trust Bank 1st Mutual Fund ranked top loser on the DSE, the unit price dropped by Tk 0.40 paisa or 9.30 percent. On this day, the unit was last traded at Tk 3.90 paisa.
DSE topped on trade is Linde Bangladesh Limited 42 crore 32 lakh takas of company shares have been traded.
A total of 32 companies’ shares were traded in the Block on Dhaka Stock Exchange. A total of 69 lakh 16 thousand 672 shares of the companies were traded. The financial value of which is 37 crore 43 lakh taka.
