Midas Financing Ltd, a junk stock, yesterday saw a price surge of 9% at Dhaka Stock Exchange in a clear reflection of the company’s recent disclosure to issue rights share.
The stock closed at Tk19.4 each, after registering a trade value of over Tk1.8 lakh.
Brokers said the price surge of the junk stock might have been due to market jittery about the rights issue as the investors are already aware about the company’s losses in the last three consecutive quarters.
Bangladesh Securities and Exchange Commission (BSEC) has approved the rights offer for 60,134,338 ordinary shares at Tk10 each, according to a disclosure on Wednesday.
The purpose of issuing one right share for existing ones (1:1) is to meet the capital adequacy for regulatory requirement of Bangladesh Bank, said the company.
The total amount expected to be raised from the initiative is Tk60.1 crore.
Record date for the entitlement of rights share will be on August 3, 2014 while subscription period for rights issue will be from Sept 1 to Sept 30, 2014.
The company, however, has an accumulated loss of Tk41.8 crore as on March 31 this year and its yearly profits were Tk0.94crore during the FY13.
According to the company’s latest quarterly report ended on March 31, 2014, it incurred a loss of Tk13.2 crore against a loss of Tk9.1 crore during the same period in 2013.
The company’s first nine months’ losses in the fiscal year 2014 summed up to Tk31.1 crore against Tk22.4 crore during the same period of FY13.
The profitability has been affected due to high provisioning the company had to made, according to its latest quarterly reports.
With having 30.88% public stake, the company’s net asset value is Tk5 per share as on March 31, 2014 while its current price is Tk19.4 each.
