I read some reactions about EBL's proposed 30% bonus shares. For years, EBL and CHCL were darlings of traders. Hence, their retention rate was very low. (Please read my post of 2012 onhttps://sharenepalcomments.wordpress.com/2012/09/19/111/.) These scrips were sold more times than others.
After Ghising episode, CHCL has lost the charm for the traders. EBL has attraction still. 30% bonus share is not a small return, but people are not happy. There is big gap between expectation and reality. The expectation from EBL was sky high.
For the healthy growth of a company, it is always better to grow in a sustainable way in three major areas - good governance by following best practices, costumer satisfaction through excellence in performance and good return to investors. If the growth affects one among the three areas, the company starts to invite trouble.
All small investors both long term and short term should understand the bitter fact that the board made out of promoters primarily will serve the interest of promoters and I believe that is normal. We retail investors should accept the limitation that we may not have any significant influence on promoters' decisions. They will not give us a single penny more than what matches their interest. This is not only applicable to EBL. We should have leveled our expectation that has this factor considered.
Now, coming to 30% bonus, it is very good return indeed. How they will reach to 4, 6 and 8 Arabs, certainly they might have plan. This 30% is from last year profit, and they may capitalize their independent reserve some time this year by issuing additional bonus shares and get that 4 Arab, or they may go for acquisition and/or merger and reach to that level. There are plenty of options. As a retail investor myself that of EBL, I am not unhappy with their proposal. We are different and our expectations are different. So, some of us could be unhappy and that is perfectly understandable.
No comments:
Post a Comment