Marico stands out from the rest of its listed multinational peers

Investors in India-based Mario Bangladesh Ltd alone received returns in 2022 as the shares of its multinational peers lost value on the Dhaka Stock Exchange (DSE), according to merchant bank research.

City Bank Capital Resources said in its report that the listed multinational companies altogether registered a 14.1% loss in 2022. Out of 13 listed companies, only Marico posted a 5.2% return to its investors, while HeidelbergCement generated the highest loss of 34.3%.

Seeking anonymity, a senior officer at a merchant bank said Marico has been able to post positive year-end returns from its shares since they were stuck at the floor price. He added that the shares were rising until the floor price was imposed in July.

In the fast-moving consumer goods (FMCG) sector, Marico has diversified its portfolio from a single product, coconut oil, the official said, adding, "Since the company has strong marketing, investors are leaning towards it in the hope that it will fare well in diversifying portfolios."

Although Unilever Consumer Care, Berger, British American Tobacco, and LafargeHolcim Cement fared well amid the economic challenges in 2022, there was no reflection in their share prices.

The merchant banker believes that the multinational companies have joined the decline in share prices of all other companies, mainly due to negative sentiments about the stock market.

According to City Bank Capital's report, market sentiment was observed as bearish due to a few factors, such as the Russia-Ukraine war, price hikes of commodities and other raw materials in the international market, record increases in oil prices, the depreciation of the taka against the dollar, decreasing quality assets in the banking sector owing to higher non-performing loans and lower provisioning, and a decrease of excess liquidity in the banking sector.

According to EBL Securities' yearly stock market review, the government's austerity measures in the face of the country's power and energy crisis have affected the operations of already struggling manufacturing companies, putting further strains on their financial performance and causing further share price erosion.

Share performance

Grameenphone, which tops the DSE in terms of market capitalisation, had been in discussions throughout the year over a ban on selling new SIMs or connections.

At the beginning of 2022, the share price of the top company in the telecom sector was over Tk350 but ended the year stuck at the floor price of Tk286.6.

According to City Bank Capital, investors received 18% negative returns from Grameenphone shares in 2022.

Market insiders believe that the ban on the sale of SIMs is the reason for this negative return. Last year, the Bangladesh Telecommunication Regulatory Commission (BTRC) barred Grameenphone from selling SIMs, citing a weak network. As a result, the company's customer base has also decreased. But in the new year, the company announced that the telecom regulator had lifted the ban.

The return from the shares of the company's closest rival, Robi, stood at a negative 13.3%. The country's second-largest mobile network operator posted losses in the April-June quarter of 2022. Furthermore, the stock market's largest fundraiser in history did not pay dividends as expected by its shareholders. So Robi's shares are trading at Tk30, the lowest among multinational companies.

Last year, investors received a negative 34.3% return from the shares of HeidelbergCement. It is a loss making company in its cement business, which has an impact on the share price. Its shares are currently trading at Tk179, down from Tk272.7 at the beginning of 2022.

Another multinational cement manufacturer, LafargeHolcim, fared well, but its share price fell.

Besides, double digit negative returns came from the shares of British American Tobacco, Reckitt Benckiser, Linde, and Singer.

Dividend yield

Grameenphone remains at the top in terms of providing dividends to shareholders compared to its share price.

The company's dividend yield is 8.7%. It paid a 250% cash dividend in 2021. Besides, it paid a 125% cash dividend as an interim payment for the first half of 2022.

British American Tobacco is next to Grameenphone in terms of dividend yield. The dividend yield of the cigarette manufacturer is 4.8%. It had paid a 275% cash dividend in 2021. Besides, it paid a 100% cash dividend as an interim payment for the first half of 2022.

HeidelbergCement is at the bottom of the dividend yield list, with a dividend yield of 1.5%.

However, Marico's dividend yield, which was at the top of the list of annual returns, was 3.7%. The company paid an 800% cash dividend in the last financial year. Currently, its shares are trading at Tk2,421 per share.

According to market insiders, Grameenphone's dividend yield is higher as its share price is lower than its dividend payout. And because the share price of others is high, the yield has been low even though the dividend is high.

Financial performance

Despite high inflation, the dollar crisis, the energy crisis, and supply-chain disruption brought on by the Russia-Ukraine war in 2022, 11 out of 13 multinational companies saw revenue growth in the September quarter. Seven of the 11 companies saw profits despite an increase in their business costs.

In the quarter ending on 30 September 2022, Berger Paints, British American Tobacco, and Bata Shoe all posted double-digit growth in revenue and profit.

Reckitt Benckiser and Linde Bangladesh both saw a decline in revenue and profit. Among these two companies, Reckitt is health related and Linde is in the oxygen business.

These two companies had performed well the previous year, owing primarily to the coronavirus outbreak. But now the business has dropped as Covid has waned.

Despite the ban on new SIM sales, Grameenphone's revenue increased by 6% and profit by 2%. But Robi's profit fell by 66% even as its revenue increased.

But Marico, which topped the share return list, failed to achieve double-digit growth in revenue and profit.

Singer and RAK Ceramics have seen the biggest decrease in profit due to cost increase.