Walton announces generous dividends despite dismal profits

Walton Hi-Tech Industries has decided to pacify its investors by announcing handsome cash dividends even though the company registered half the last year's profits amid the ongoing pandemic.

The local electronics giant approved 200 per cent cash dividend for general investors and 75 per cent for directors and sponsors for the year that ended on June 30, 2020.

"We always think for the betterment of the people and for this reason, we announced a handsome dividend despite booking a lower profit this year, said Abul Bashar, additional managing director of the company.

The company's earnings per share has seen a 47 per cent drop in a year -- from Tk 45.87 in the last fiscal year to Tk 24.21 in the current fiscal year, according to data from the Dhaka Stock Exchange.

"Our main selling quarter was the April-June quarter, which was hit hard by the pandemic. So sales and revenue significantly fell in the quarter, which ultimately reduced our profits," Bashar added.

About the lower dividend for sponsors, Bashar said: "To run the business smoothly, we need more working capital and repay bank loans. So we decided to provide lower dividends to the sponsors to increase our retained earnings."

The company's paid-up capital was Tk 302 crore and its reserve and surplus stood at Tk 6,997 crore.

It is a good sign that the newly listed company has disbursed high dividends because many firms are not doing this, said Abdul Haque, a stock investor who has been trading since 1995.

This tendency will boost investors' confidence, he said, adding that sometimes the newly listed companies pay lower cash or stock dividend.

Ultimately, stock dividends are not worth anything to investors since they do not pay out, Haque added.

However, stocks of the newly listed company dropped 8.57 per cent to Tk 691 yesterday on the DSE board.

Walton Hi-Tech Industries, now the second largest listed company, had its trading debut on September 23 after securing approval from the Bangladesh Securities and Exchange commission (BSEC) on June 23.

Walton raised a fund of Tk 100 crore by issuing 29 lakh shares. After getting listed, its market capitalisation reached the second top level.

Its market capitalisation stood at Tk 22,895 crore as of yesterday, when the largest listed company, Grameenphone, secured market capitalisation of Tk 44,559 crore.

Meanwhile, the country's bourses witnessed a fall yesterday.

DSEX, the benchmark index of the DSE, dropped 22.02 points, or 0.44 per cent, to 4,892.

Turnover, another important indicator of the capital market, edged downwards by 13.9 per cent to Tk 885.96 crore.

Of the 357 traded issues, 111 advanced, 186 declined and 60 remained unchanged.

Bangladesh Building Systems topped the gainers' list with a 13.23 per cent increase followed by Prime Insurance, Bay Leasing, Global Insurance and City General Insurance.

Sandhani Insurance topped the turnover list, trading stocks worth Tk 29 crore followed by Beximco Pharmaceuticals, SS Steel, Global Insurance, Paramount Textile and Beximco Ltd.

Malek Spinning shed the most, decreasing by 10.34 per cent followed by Walton Hi-tech Industries, Continental Insurance, Familytex, and Sonar Bangla Insurance.