PUBLICINVEST Research is ceasing its coverage on Serba Dinamik Holdings Bhd given the company is embroiled in a host of heightened uncertainties – from accounting-related queries, legal challenges with auditors (both KPMG PLT and Ernst & Young Consulting Sdn Bhd and the regulator.
“We are unable to appropriately assess the prospects of the group in the near to medium term (due to the mounting uncertainties),” justified analyst Nurzulaikha Azali in a company update.
“With earnings visibility likely to be limited and given the need to re-deploy our resources internally, we are ceasing coverage on Serba Dinamik.”
For the record, PublicInvest Research’s last call on the global oil & gas (O&G) service provider is “neutral” with a target price of 31 sen based on a 0.3 times multiple to its FY2021 book value of RM1.05.
“Earnings estimates should no longer be relied on as basis of investment decisions,” the research house pointed out.
Below are PublicInvest Research’s reasoning on uncertainties facing Serba Dinamik:
“Shares of Serba Dinamik (Serba) have been suspended since October 22, of which Bursa Malaysia Securities Bhd cited Paragraph 16.02(1)(c) of the Main Market Listing Requirements (MMLR) in the interest of maintaining an orderly and fair market in the trading of the company’s securities.
This came as a result of a directive by the regulator to disclose findings of the special independent review (SIR) pursuant to Paragraph 2.23(1) of the MMLR which Serba declined to do, contending that Ernst & Young Consulting Sdn Bhd is still in the midst of performing the SIR.
Subsequent to this, Serba has missed coupon payments for its US$300 mil coupon though the company has indicated that it will make good the payments within the one-month grace period under the terms of agreement.
Meanwhile, Serba’s chairman and an independent director have just resigned, citing that Bursa’s most recent stipulations had stopped them from fairly discharging their duties.
Bursa had on Nov 22 announced that it was seeking a court order to compel Serba to disclose updates on the findings of the SIR.”
Serba Dinamik was last transacted at 35 sen at the close of the mid-day trading on Oct 22 prior to the trading suspension of its shares/warrants, hence giving the company a market capitalisation of RM1.31 bil. – Nov 25, 2021
