Best Holdings reports profit plunge, blames it on political instability

Best Holdings, which has been falling on the Dhaka bourse since listing, experienced a further decline in profit in October-December (Q2) of FY25.

Its consolidated profit plunged 97 per cent year-on-year in Q2 of FY25. The profit had slumped at the same rate in the first quarter through September last year to Tk 8.95 million, compared to the same quarter the year before.

In the six months through December 2024, the year-on-year decrease in consolidated profit was 85 per cent. The company has not disclosed the latest figures of profit.

However, it said the income fell primarily due to the country's political instability that impacted the tourism industry.

The company has also witnessed a fall in the operating cash flow and the net asset value in H1, FY25, compared to the same period a year ago.

Best Holdings, which has a business of hotels and agro-based products, established Le Meridien Hotel in the capital.

Though political instability has been cited as the reason for the profit decline, Best Holdings' financial trend bears resemblance to many other companies that reported faltering business after listing.

Upon its debut trading in February 2024, the company reported a 23 per cent year-on-year growth in profit to Tk 1.41 billion in FY24. But a drastic year-on-year fall in profit was seen in the first quarter of FY25 and the trend continued in the second quarter of the year.

Best Holdings was allowed to bring IPO in violation of the existing rules that forbid increasing paid-up capital through cash within two years before the submission of IPO proposal.

The regulator had asked the company to submit the IPO proposal, fulfilling three conditions. One of the conditions was to keep away from issuing new shares before the IPO.

Best Holdings, the owning company of Le Meridien Dhaka, received approval of the Bangladesh Securities and Exchange Commission (BSEC) in October 2023 for raising Tk 3.50 billion under the book-building method.

The cut-off price of its IPO shares was fixed at Tk 35 each through electronic bidding.

General investors, including non-resident Bangladeshis, got IPO shares at Tk 24 each at a 30 per cent discount on the cut-off price.

The stock fell seven days after listing and since then it has been on a downward spiral except for a few trading sessions.

On the day of debut trading, the stock advanced 10 per cent to close at Tk 26.40 per share on the Dhaka Stock Exchange (DSE).

The share price rose to Tk 43.10 each on February 14, 2024 and then it started falling. The stock settled at Tk 17.30 per share on the DSE on Thursday, a 60 per cent plunge from the peak reached seven days after the debut trading.

The stock exchanges usually demand explanations from listed companies of abnormal price hikes.

But the Dhaka Stock Exchange (DSE) asked Best Holdings in October last year to explain whether there was any undisclosed price sensitive information behind the stock's fall.

The company replied in the negative.

The stock price of Best Holdings plummeted 54 per cent between May and October last year.

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