Evince Textiles to spend Tk 70cr on expansion
Evince Textiles Ltd, listed on the stockmarket, has decided to reinvest the profit it made in the last fiscal year as part of efforts to expand its production capacity by 50 percent.
This has led the exporter not to declare any dividend for 2017-18 although it had earnings per share (EPS) of Tk 1.06.
The company, which produces woven fabrics for renowned international brands and retailers, disseminated the news yesterday through the website of the Dhaka Stock Exchange (DSE).
According to the announcement, Evince Textiles is going to invest Tk 70.37 crore to expand its production capacity. Of the planned investment, Tk 55.41 crore will be financed by bank loans and the rest will come from its own coffer.
“In order to make the investment from our own source, we decided earlier not to give any dividend despite making the profit,” said Anwar-ul Alam Chowdhury, chairman of Evince Textiles.
He said if the capacity can be expanded by 50 percent, the factory will be capable of earning more in the future. “So, investors will be happy then,” he told The Daily Star.
On September 23, the board of directors of the company decided not to pay any dividend for the year that ended on June 30, 2018.
Because of the decision, the company became a “Z” category stock the following day and its shares fell.
Evince Textiles' shares plunged 41.02 percent to Tk 9.20 on September 25 from Tk 15.60 on September 19.
Market analysts, however, said Evince Textiles still could have declared stock dividend.
The decision to declare no dividend has disheartened investors, said one analyst, adding that the company could have given the expansion news on the same day it declared that no dividend will be offered for 2017.
In that case, panic among investors could have been averted, he said.
Mostaque Ahmed Sadeque, president of the DSE Brokers' Association, said the company has earned positive EPS, but offered no dividend. “It's totally unexpected.”
He also said the company was listed in 2016 and within a short time it has become a junk stock. “It's totally disheartening.”
Chowdhury, also the managing director of Argon Denims, another listed company, however, said: “We don't want to harm investors; we are here to bring benefits for them. We want to give them long-term benefits.”
Source: https://www.thedailystar.net
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