The stock price of Achia Sea Foods, which made its debut on the SME Platform of the the Dhaka Stock Exchange (DSE) just a month ago, has been rising 'abnormally' riding on short-term speculation.
Within a month, the SME firm's stock price jumped 392 per cent or Tk 39.20 each from its issue price of Tk 10, according to the DSE data.
The frozen food exporter's share closed at Tk 49.20 each on Wednesday. Its shares traded between Tk 10 and Tk 54.10 in a month since its debut on July 18.
The recent price surge prompted the prime bourse to serve show-cause notice on the company last week to know whether there was any price sensitive information.
The company, however, said that there is no undisclosed price sensitive information (PSI) of the unusual price hike.
Even after being served show-cause notice, the company's share price did not retreat. Rather, it rose 1.44 per cent further on Wednesday.
Market insiders said the investors showed their appetite for the new issue amid short-term speculation. So, it created an 'irrational hype' among investors since its debut.
The investors mostly rushed to buy its stock without conducting any proper analysis as they see a continuous rise in values every day, said a merchant banker.
"As the number of shares of the SME companies is quite low, investors speculate that the stock price will rise further and start buying to make a quick profit," he said.
Stock prices of SME Platforms are soaring in recent times even as the stock market regulator took some steps to check such unusual hike in share prices.
On July 27, the securities regulator increased the investment limit for an investor to be qualified for trading shares on the SME Platform. It raised the minimum investment limit from Tk 2.0 million to Tk 3.0 million.
Achia Sea Foods raised Tk 150 million by issuing 15 million ordinary shares at a face value of Tk 10 each under the fixed-price method.
The company will utilise the proceeds for machinery installation, repayment of loans and issue management.
The SME firm has reported a profit after tax of Tk 41.98 million for the year ended on June 30, 2021 as against Tk 14.81 million for the same period of the previous year.
The company's basic earnings per share (EPS) stood at Tk 1.12 for the year ended on 30 June 2021 and net asset value stood at Tk 14.23, considering the post-IPO paid-up capital.
The company's paid-up capital is Tk 373.56 million and authorised capital is Tk 1.0 billion while the total number of shares is 37.35 million.
The company will not be allowed to issue bonus shares in three years from debut date on the SME Platform, according to the BSEC condition. Incorporated in 1993, Khulna-based Achia Sea Foods is engaged in the processing and exporting of finished quality seafood products -- shrimps and fishes -- in the foreign market.