Factory Shut, Abnormal Price Rise
Tung Hai simply overlook DSE
Logo of Tung Hai
Listed company Tung Hai Knitting and Dyeing Limited is in a financially fragile state due to halted factory production, prolonged losses, and negative net asset value. Amidst this, an abnormal rise has been observed in the company's share price. After noticing the matter, the Dhaka Stock Exchange (DSE) sent a letter to the company seeking reasons, but the company did not provide any response.
According to DSE sources, on August 2, Tung Hai Knitting's share price was Tk 2.80. By the end of trading on August 23, it had risen to Tk 5.10. That means within just 21 days, the share price increased by Tk 2.30, or nearly 82 percent.
The DSE had asked whether there was any price-sensitive information from the company behind this abnormal price surge. However, the company authorities did not provide any explanation on the matter.
Production Halted, Factory Rusting
Earlier, a special inspection team of the DSE visited Tung Hai Knitting's factory. On the ground, they found the factory's production activities completely shut down.
The inspection report stated that due to the factory remaining unused for a long time, various machinery and equipment have been damaged. The report also mentioned that rust and layers of dust had accumulated on these machines.
According to regulations, it is mandatory to inform investors of important information such as the factory's production being halted. However, the inspection also revealed that Tung Hai Knitting did not properly disclose this information.
Company Sinking into Losses
Along with the production halt, the company's financial condition is also very weak. Due to continuous losses, Tung Hai Knitting has long been placed in the 'Z' category.
According to the latest unaudited financial report, the company's earnings per share (EPS) is negative. At the same time, net asset value per share (NAVPS) is negative Tk 6.35. That means the company's liabilities exceed its total assets.
Moreover, the company's accumulated loss is approximately Tk 76 crore. The company has also not been able to pay any dividends to general investors for several years.
Majority Owned by General Investors
Established in 2004, Tung Hai Knitting and Dyeing was listed on the stock market in 2014. The company's paid-up capital is Tk 106.65 crore, and total shares are more than 10.66 crore.
Of these, entrepreneurs and directors hold 30.04 percent shares. Institutional investors hold 7.58 percent. The remaining 62.38 percent shares are held by general investors.
Market insiders say it is concerning for a company's share price to rise in this manner despite serious risks such as production halt and negative net asset value. If investors invest without understanding such fundamentally weak shares, general investors are at the highest risk of suffering losses.
In their view, it is necessary to investigate whether any manipulation or dishonest syndicate is behind the abnormal rise in Tung Hai Knitting's share price. At the same time, whether there have been any irregularities in the company's information disclosure should also be brought under the regulatory authority's investigation.
