Mohammad Ali
The
Dhaka Stock Exchange (DSE) expert panel has found some companies'
initial public offerings (IPOs), awaiting decision on approval
detrimental to interests of the prospective investors, according to
sources in the prime bourse.
The expert panel also found abnormal information in some companies' IPO applications, the sources said.
Analysing
the draft prospectuses and other information of the companies, the
panel recently recommended placing the issues before the next Board of
Directors meeting of DSE.
Regarding
of Western Marine Shipyard Ltd and Shamsul Alamin Real Estate Ltd, the
panel opined that approval of the companies IPOs 'may be detrimental to
the interest of the prospective investors' on the basis of present
financial status and information disclosed in their prospectuses.
In
the seven-point recommendation on Western Marine Shipyard, the expert
panel said, "Turnover growth of the company was around 100 per cent in
last year compared to previous year, which is unusual."
Company's
plan to use 80 per cent of IPO proceeds for loan repayment, and
utilisation of its pre IPO placement proceeds for same purpose appears
that the company is trying to come out of debt burden by using public
fund, as per the panel's observations.
Western
Marine has negative operating cash flow for the last five years,
appearing that the company has a going concern threat. The company will
be heavily capitalised after IPO and given its current performance will
not be able to pay reasonable dividend in future.
The
company's credit rating seams 'unreasonable' and the offer price of Tk
90 per share appears to be on the higher side, the observations states.
About
Shamsul Alamin Real Estate Ltd, its directors' loan through banking
channel for Tk 4.5 crore is not verifiable. Further the balance Tk 6
crore, which was transacted in cash, is not at all acceptable to the
expert panel, the panel in its observations said, adding that thus the
repayment of directors loan of Tk 10.5 crore from IPO proceeds is not
acceptable.
The company's offer price of Tk 58 per share seems to be significantly on the higher side.
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