Shares in engineering sector: A growing lure for investors

Transactions in the engineering sector hit nearly 15% of total buy-sell at the Dhaka Stock Exchange between January and September

 
Shares in the engineering sector of the premium bourse has become a growing attraction for investors as they are lured by good dividends, sound market capitalization, and the business expansion prospects of listed firms.

Transactions in the engineering sector hit nearly 15% of total buy-sell at the Dhaka Stock Exchange between January and September, according DSE data. 

Out of 36 such listed companies, nearly 28 are listed in the ‘A’ category, meaning the companies regularly give dividends to their shareholders.

Mohamed Ali, CEO, Dhaka Bank Securities, said long term investors often prefer companies with huge capital bases for their investment decisions. As most of the listed companies in the engineering sector have sound paid-up capital, investors invest in such companies.

“The engineering sector has tremendous prospects to grow as both public and private sectors have been investing heavily to improve the country’s infrastructure deficit and other building establishments respectively,” Ali told the Dhaka Tribune.

“Investors are attracted to the sector, given its current performance and prospect to grow.”

Sectors such as automobiles, pipes, steel, and cables dominate the engineering sector.

According to DSE data, the engineering sector in the January-June period had a turnover of Tk 81,063.16 mn, which is 14.67% of total turnover.   The turnover was Tk 155,263.03 mn or 13.72% a year earlier.

Top officials at GPH Ispat and BBS cables said the engineering sector earned the confidence of capital market investors with the increasing demand for construction materials in the country.

They said many listed companies belonging to the engineering sector in the capital market have made big investments for their business expansion in recent times.

“Many businesses increased their production of billets to produce more rods as the demand for construction materials keeps soaring to keep pace with economic development,” GPH Ispat Managing Director Mohammed Jahangir Alam told the Dhaka Tribune.

“As a result, the engineering sector is at the top of the turnover chart in the capital market.”

He said as the cooling housing market is reviving, the demand for construction materials is also rising. More production is followed by more profits that result in good dividends to shareholders, he added.

Between July and September, the banking sector lags behind the engineering sector in total turnover at the DSE, market players said.

Recently BSRM Steels, GPH Ispat, and BBS cables Limited in the engineering sector got environmental clearances from the government. The new unit of BSRM Steel Mills was given the go-ahead in Mirsarai upazila of Chittagong.. The company will produce iron billets at this unit.

BBS cables Managing Director Engr. Abu Noman Howlader told the Dhaka Tribune: “The government increased capacity of power generation and improved the infrastructure sector. This is why the demand for engineering products is on the rise.

“Companies have been registering good profits, attracting general investors to park their capital in manufacturing sector shares.”

He also said BBS Cables has recently signed an agreement with BBS Cables (Unit-2) to promote and run its business operations using the BBS Cables logo. In this connection, BBS Cables Limited will earn approximately Tk. 96,00,000.00 (Tk. 1,600 X 6,000 MT) per year as service charge from BBS Cables (Unit-2) Ltd. 

“Furthermore, the production capacity of BBS Cables (Unit-2) Ltd will be 6,000 MT (approx) per year and the commercial production of BBS Cables (Unit-2)   will start by December, 2018. The validity of this agreement is up to June 30, 2025” he added.

GPH Ispat is set to invest about Tk 1,700 crore in additional funding to expand its production capacity by using ultra-modern long-steel technology.

In line with the expansion, the Chittagong-based steel manufacturer's yearly production of MS billets will increase to 840,000 tonnes. Its existing annual capacity now stands at 168,000 tonnes, he said.

GPH Ispat Managing Director Mohammed Jahangir Alam said they have invested heavily in their existing manufacturing setup. 

Engineering sector companies are : Aftab Automobiles, Anwar Galvanizing, Apollo Ispat Complex Limited, Atlas Bangladesh, Aziz Pipes Ltd, Bangladesh Building Systems Ltd., Bangladesh Lamps, Bangladesh Steel Re-Rolling Mills (BSRM), BD.Autocars, Bd.Thai Aluminium, Bengal Windsor Thermoplastics Ltd, BSRM Steels Limited,  Deshbandhu Polymer Limited, Eastern Cables, BBS Cables, Golden Son Ltd, GPH Ispat Ltd, IFAD Autos Limited, Kay and Que, KDS Accessories Limited, Monno Jute Stafflers Ltd, National Polymer, National Tubes Limited, Navana CNG Limited, Olympic Accessories Limited, Oimex Electrode Limited, Quasem Drycells, Rangpur Foundry, Ratanpur Steel Re-Rolling Mills Limited, Renwick Jajneswar & Co (Bd), S. Alam Cold Rolled Steels, Shurwid Industries, Singer Bangladesh, Yeakin Polymer, Nahee Aluminum,  and Western Marine Shipyard Limited.

Source: https://www.dhakatribune.com

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