Junk stocks of paper & printing do better than peers

Junk stocks of the paper & printing sector, including Khulna Printing & Packaging Ltd. (KPPL), have rallied for the last two months despite the companies' poor financial performance.

The sector registered the highest appreciation of 13.18 per cent last week on the Dhaka Stock Exchange (DSE), mainly backed by the sudden escalation of the stock of Bashundhara Paper Mills.

A team of the DSE on February 04 went to visit the head office of KPPL to inspect its operational status but found it closed. By that time, however, the stock soared 257 per cent to Tk 33.20 per share from Tk 9.3 per share on January 01.

The DSE's earlier visits to the factory of KPPL had the same outcome but the stock kept on rallying with investors not paying any heed to the bourse's repeated warnings against injecting money in the company.

The KPPL reported losses for the five years through 2022 and did not make any disclosure for the subsequent years.

Another junk stock namely Hakkani Pulp & Paper Mills experienced a 39 per cent appreciation in the last two months. It witnessed a 95 per cent year-on-year decline in profit to Tk 0.78 million in FY24.

Its profit fell further in October-December (Q2), FY25 from the same quarter of the previous year. It reported an EPS (earnings per share) of Tk 0.23 in Q2, FY25, reduced from Tk 0.32 in the same quarter of the previous year.

The company has been retaining the status of 'B' stock since FY18 by distributing nominal dividends.

Bashundhara Paper Mills experienced an appreciation of 47.7 per cent last week. The company experienced a 191.50 per cent year-on-year decline in profit to Tk 191.50 million in FY24.

Later on, the company reported a loss of Tk 4.04 per share in Q2, FY25 against an EPS of Tk 0.52 reported for the same quarter of the previous year.

Of the remaining companies of the sector, Sonali Paper & Board Mills had a 14 per cent price gain on the Dhaka bourse to Tk 160.90 each share in the two months through Thursday.

The company had secured a gradual rise in profit until FY23. For the year it reported a profit of Tk 156.16 million. Then income fell drastically to Tk 124.80 million in FY24.

The share price of Bangladesh Monospool Paper Manufacturing Company, which had reported a gradual rise in profit until FY24, saw a 2.51 per cent fall in the stock price over the last two months.

The stock price of Paper Processing & Packaging also declined 9.08 per cent in the last two months.

However, it reported a profit of Tk 14 million in FY18 and the profit gradually rose to Tk 74.57 million in FY24.

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