How profitable are our local companies listed with the stock market? Their sheer numbers may reveal little and a look at their Earnings per Share or EPS as they say in investment lexicon that actually reflects profitability of a company looks shocking.
Among the 319 local companies listed on the share market, only six have reported EPS in the last 5 years, and naturally these are the very entities that offer the highest dividends.
EPS is actually one of the most important variables in determining a share's price and is calculated by dividing a company's profit divided by its outstanding shares.
That actually reflects how much each share unit makes profit and is an important component to decide how much a buyer is willing to pay for a share.
These six companies with the double-digit EPS are Renata Ltd and Square Pharmaceuticals Ltd from pharmaceutical and chemical sector; Meghna Petroleum, Jamuna Oil, and Padma Oil Company Ltd from fuel and power sector; and Stylecraft Ltd from the textile sector.
Renata's EPS was Tk44.35 in last fiscal year, which has been constantly on the rise for the previous four years too. Each of its share has a face value of Tk10.
The company distributed 110 percent dividend among its investors last fiscal year.
Renata, previously the Swiss-based Pfizer, is a unique company in the sense that its paid up capital is also huge at Tk81 crore. So it naturally has to make a big profit to keep its EPS high.
"Our main mantra is discipline. This separates us from others. We always have in our mind the goal to satisfy our shareholders," said Md Jubayer Alam, company secretary of Renata.
With a monopoly in fuel marketing, the state-owned Meghna Petroleum has been doing good business. With a large Tk108 crore paid-up capital, its EPS was Tk33.30 last fiscal year. Because of high profitability, its dividend distribution is also high, making it another blue chip company on the market.
During the last five years, the company distributed a maximum of 140 percent and a minimum of 105 percent dividend.
"We sell products at prices fixed by the government. Our profit is rising because there is no competitor in the market. The shareholders are also enjoying a fair share of this profit," said Mir Saifullah-Al-Khaled, managing director of Meghna Petroleum.
Square Pharma, the leading pharmaceuticals and chemical company of the country, had registered an average EPS of Tk15 from in the last five years. The paid-up capital of the company is really big at Tk789 crore.
"We have no bank loan. Our reserve is also healthy. It will secure the future of the company and its shareholders," said Khandakar Habibuzzaman, company secretary of Square Pharma.
Stylecraft is the only company from the textile sector that showed double-digit EPS.
It has a low net profit but it maintains high return to shareholders because of its small paid-up capital of only Tk5 crore. It had clocked its highest EPS of Tk75.94 two years back.
Its dividend distribution is also lucrative at 410 percent last year.
Stylecraft: In the last five years, the company showed its highest EPS Tk75.94 in 2015-16. The lowest EPS was Tk26.16 in 2013-14. In the last five years, Stylecraft distributed a maximum of 410 percent in stock dividend and 75 percent in cash dividend.
In the power sector, the United Power Generation and Distribution Company secured double-digit EPS in the last four years. The EPS increased because the company had merged with three other companies of the United Group.
How the multinationals fare
Meanwhile, among the multi-national companies listed in the share market, eight companies reported two-digit EPS. Only one company, British American Tobacco, secured a three-digit EPS. They are the highest dividend giver among all listed companies.
Among them, Heidelberg Cement, Linde Bangladesh, Berger Paints, Marico Bangladesh, Grameenphone, Bata Shoe, and Reckitt Benckiser reported double-digit EPS for five consecutive years.
The GlaxoSmithKline Bangladesh Ltd conceded a big loss in 2018.
The company stopped producing medicines because of its long-term losses. However, the company showed a double-digit EPS in the previous four years.
In the half-yearly estimation of this fiscal, the company also showed double-digit EPS. Despite the collapse of the medicine business, the company has been continuing the production of consumer products.
"Corporate good governance, transparency and accountability help profits. The multi-national companies are doing good because they ensure this formula," said Professor Abu Ahmed of Department of Economics at the University of Dhaka.
"Many local and multi-national companies are doing good who are not listed on the share market. In my tenure, I brought some good companies, including government-owned companies, to the market. The government and the BSEC (Bangladesh Securities and Exchange Commission) have to perform a strong role to bring the companies to the market," said Dr AB Mirza Azizul Islam, former finance adviser to the Caretaker Government.