Central Pharma’s shares soar upon rumour

The share price of Central Pharmaceuticals Ltd has been rising at the Dhaka Stock Exchange (DSE) over the last few days over rumours of ownership change at the company. This is in contrast to the share prices of reputed companies that have been slipping over the same period.

Central Pharma's share also went up a month ago on similar rumours of ownership change. The back to back speculation has resulted in an 88 percent increase in the company's share price.

The closing price of the company's shares at the DSE was Tk16 on Monday – up by 9.59 percent in a single day. Central Pharma shares were traded at Tk8.5 even a month ago.  

The company gave only 1 percent cash dividend to its shareholders last year.

The pharmaceutical company has stopped production, and the National Board of Revenue has frozen the company's bank accounts, forcing it to use cash for transactions.      

This correspondent made several attempts to reach Central Pharma Managing Director Munsur Rahman over phone. However, he did not respond.

"We currently do not have any information which suggests that the company will be sold," said Kamal Ahmed, head of the company's share department.    

Kamal said they tried to sell the pharmaceuticals company in 2017, but could not do so.

A private investor named Abdul Mannan, who trades through Sheltech Brokerage, has bought some Central Pharma shares because he heard that the ownership of the company will change soon.

"Alif Group is buying the pharma. Moreover, Central Pharmaceuticals is going to resume production because it has carried out a major overhaul of its production units," Mannan said.   

Alif Group, in 2017, showed some interest in buying Central Pharma. Even though the sale did not go through, speculation over ownership change pushed up Central Pharmaceuticals share price by 120 percent.     

Kamal Ahmed, the head of the pharmaceutical company's share department, said that production was stopped at the factory in December last year on the orders of the Directorate General of Drug Administration.

He claimed that they have almost completed factory repairs, and are waiting for the go ahead of the Drug Administration to resume production.       

The net profit of Central Pharmaceuticals Ltd dropped 64 percent to Tk5 crore in the last four years. The year-on-year net profit in the first half of the current financial year fell 75 percent to Tk1.31 crore.

"We are closely monitoring the parties that are trading with Central Pharmaceuticals," said Md Saifur Rahman, executive director and spokesperson of the Bangladesh Securities and Exchange Commission.      

He told The Business Standard that the commission is also looking into the price sensitive information of the company. 

The pharmaceutical company's paid-up capital is Tk120 crore. The sponsor directors hold 25.89 percent shares of the company, and institutional and general investors hold 15.47 and 58.64 percent shares respectively.