Team formed to probe Sea Pearl stock's rally

TBS Illustration

The securities regulator has formed an inquiry committee to investigate if there had been any price manipulation, insider trading or other irregularity behind the price hike of Sea Pearl Beach Resort and Spa Ltd's shares. 

The team has 60 days to submit its findings to the Bangladesh Securities and Exchange Commission. 

Each share of the five-star hotel company was trading below Tk50 in August last year, which then hit above Tk300 this February. 

Meanwhile, the company, which once struggled to pay its bondholder Investment Corporation of Bangladesh (ICB) back citing business slowdown due to road construction in front of the hotel premises and pandemic, posted stellar earnings growth in July to March period of the fiscal 2022-23. 

In the first nine months of FY23, the company's earnings per share stood at Tk6.63, which was only Tk1.07 in the same period previous fiscal. 

In a stock exchange filing, the company said its asset value increased as it made a net profit of over Tk80 crore during the nine-month period. Its profit growth was attributed to a higher revenue as the business bounced back from post-pandemic levels. 

Utilisation of rooms, full-fledged operation of its water park, revenue from cruise ship and non-AC restaurants, and other activities were mentioned as the sources of the hotel's increased revenue.

Also, Sea Pearl Beach Resort and Spa's Sponsor Director Shamim Enterprise (Pvt) Ltd transferred 4.88 crore Sea Pearl Beach Resort shares to Seapearl Sundarban Eco Resort earlier this year. Then the listed company opted to buy 30% shares of Shamim Enterprise at face value.

However, the skyrocketed share price later began to fall at the end of May and it closed at Tk175.1 on the Dhaka Stock Exchange on Thursday.

The regulatory move came after a recent media report that named some members of the cartel who allegedly manipulated the stock price.