The share price of small-cap GQ Ball Pen Industries – the manufacturer of legendary brand Econo – jumped by 54 percent in the last five days upon rumours that a business giant is going to acquire the company's shares.
On July 7, each share of the company was traded for Tk66 in the Dhaka Stock Exchange (DSE), and it rose to Tk101.40 after five working days.
The closing price of its each share was Tk101.40 on Tuesday, a 9.97-percent increase from the previous day's.
The exchange, in a notice, asked the company to explain the reason behind the rapid surge in its share prices.
Uzzal Kumar Saha, company secretary of the GQ Ball Pen, denied making any comment on the matter.
A top official of a brokerage house said there was a rumour that BRB Group was buying GQ Ball Pen's shares. But there was no supportive information to it.
The paid-up capital of GQ Ball Pen is only Tk8.92 crore.
Gamblers can easily manipulate the shares of such a small-cap company, said a market insider.
The company is yet to publish its financial statement for the third quarter of the 2019-20 financial year.
In the half-yearly statement of the last financial year, the company posted 55 percent growth in ballpoint pen sales to Tk6.32 crore.
Despite a positive growth in sales, it incurred a net loss of Tk61 lakh for this period due to an increase in the production, marketing and administrative costs.
A company insider said GQ Ball Pen has a plan to reinvent itself through a market comeback with plastic and commercial building rental businesses.
"Besides, the construction of a 14-storey commercial building in Dhaka's Uttara area is going on. It will be completed in 2020, and the company expects a handsome income by renting it on commercial purposes," he added.
GQ Ball Pen began its journey in 1981 aimed at meeting local demands. Its business went well for the first 30 years. In the wake of multiple challenges, however, the company began losing its market after 2012.
It saw a 64-percent fall in sales in the last eight years. It posted earnings of Tk21 crore in the 2011-12 fiscal year. The amount dropped to Tk7.59 crore in the 2018-19 fiscal year.
The gradual fall in sales had the company confront losses. Investments in the stock market and fixed deposits are now the sole means of profit for GQ Ball Pen Industries Limited.
Dull sales and a rise in the operating costs forced GQ Ball Pen to experience losses in the last two consecutive years. Nevertheless, the company was able to give dividends to stockholders from its reserves. Its sponsors and directors have not received any dividends since the 2018-19 financial year.
In the 2018-19 accounting year, the company gave 10 percent cash dividends to shareholders. It incurred a loss of Tk1.72 in each share during the period.
The loss per share was Tk5.12 in the 2017-18 fiscal year.
Out of total shares, sponsors and directors hold 41.88 percent, institutional investors 1.47 percent, foreign investors 0.05 percent and general investors 56.60 percent.