- In the second quarter, the reported profit margin was 52%
- No explanation for the significant revenue and profit growth
- Would have faced a shortage of working capital in the past four years
- They claimed that the operation of their factory was partially functioning
- The share price has jumped 147% since December
Yeakin Polymer Limited, a producer of plastic bag packaging for local and export industries, reported abnormal profit in the October-December quarter of the 2021-22 financial year.
During the period, the company recorded a net profit of Tk 4.70 crore, while it suffered a loss of Tk 0.90 crore in the same period of the previous financial year.
Yeakin Polymer only earned Tk 8.42 crore from product sales, four times higher than the same period last year, and its profit margin stood at 52% in the second quarter of the current exercise.
Despite the requirement of the corporate governance code, he did not specify the reason for such strong growth in profits and revenues.
It revealed the quarterly report on February 10, which was approved by its board of directors that day.
This correspondent attempted to reach Yeakin Polymer Chairman Quazi Anwarul Haque, Managing Director SM Akter Kabir and Company Secretary Akhtaruzzaman for comments on the significant jump in second quarter profits, but found their phone numbers turned off. .
Deshbandhu Polymer, Yeakin’s stock market competitor, had revenue of Tk 24.29 crore and recorded a net profit of Tk 1.19 crore in the corresponding period.
At the end of the second quarter of fiscal 2022, the profit margin of Deshbandhu Polymer stood at 5%.
Profit margin is one of the profitability ratios commonly used to assess how well a company or business activity makes money. It represents the percentage of sales that turned into profits.
A senior DeshBandhu Polymer executive told The Business Standard earlier that the company could not make much profit due to an increase in raw materials and transportation costs.
Yeakin Production Status
Yeakin Polymer has been out of production for over two years but they have not disclosed it, keeping its shareholders in the dark about its latest status.
The company reportedly halted production three years after its IPO in 2016 due to a decline in market demand for plastic bags and a shortage of its working capital.
Fames and R audited the company’s accounts for three years, from fiscal year 2018-19 to fiscal year 2020-21, but gave no qualified opinion on its production, which is a violation of law on securities.
When the report was published in The Business Standard, the Dhaka Stock Exchange (DSE) came forward and sent a query letter to the company to inquire about its operational status.
In response to the DSE’s letter, the company said it has faced working capital crises for the past four years. It also suffered losses during the Covid-19 pandemic which caused them to continue production at limited capacity from March to July 2021.
During the pandemic, one of the managers and two workers died from Covid-19 while other managers and managers were also affected.
They also said that during this unimaginable great period, the company did not find any form of assistance from Prime Bank and Islami Bank. As of 2020, the company approached other banks and non-bank financial institutions for additional working capital, but processes were slow due to the pandemic.
The unusual rise in the share price
Since December, Yeakin Polymer’s stock price has risen uncharacteristically for no apparent reason. Until February 10 this year, its share price jumped 147% and closed at 24.90 Tk on the DSE.
The DSE sent a query letter to the company to find out the reason for the unusual price hike on February 2. In response to the DSE’s letter, they said the company has no undisclosed price-sensitive information regarding the recent unusual price spike and increased stock volume.
There were advance reports that the company was going to post good profits in the second quarter, it was revealed speaking to several brokerage firms.
They also mentioned another rumor about possible ownership changes spreading through the market.
In 2016, the company raised Tk20 crore by unloading 2 crore of shares in the capital market to increase its production capacity.
In the initial public offering (IPO) prospectus, the plastic bag maker had posted 183% growth in revenue and 4.18% in profit over the previous five years to 2016.
In the year of its listing, the company paid a 10% stock dividend to its shareholders.