THE release of its audited FY6/2021 financial statements and annual report (AR) as well as the Special Independent Review (SIR) report are two vital immediate outcomes for Serba Dinamik Holdings Bhd.
The financial statements and AR has to be rolled out by the company’s newly appointed auditor Nexia SSY before Oct 31 while the SIR is expected to be released around October by special independent reviewer Ernst & Young Consulting Sdn Bhd (EY).
“There is intense urgency for Nexia to meet the deadline (Oct 31) for AR publication following its recent appointment as auditors in end-July,” noted TA Securities Research analyst Kylie Chan Sze Zan in a results review.
“Serba’s FY6/2021 AR should include Nexia’s review of KPMG’s findings which may finally clear speculation surrounding Serba’s financial integrity.”
Pending the outcome of the SIR, Hong Leong IB (HLIB) Research called on investors to shy away from Serba Dinamik “for the time being, at least until all the audit issues have been clarified”.
“We are also wary that there has been a significant reduction of investor engagement after the revelation of recent events,” opined analyst Jeremie Yap.
“Even if the verdict of the SIR is to be in favour of Serba, we reckon that its share price may not return to its previous levels as institutional investors would factor in higher risk assessments due to corporate governance, be it perceived or otherwise.”
Yesterday, the global integrated oil & gas (O&G) service provider announced an unaudited net profit of RM13.8 mil – the lowest in its corporate history – from a revenue of RM1.2 bil for its 6Q FY2021 ended June 30, 2021.
For the cumulative 18-month period, the group registered a total revenue of RM8.6 bil with net profit of amounting to RM758.4 mil. Similar to the previous quarter, there is no comparison for the corresponding quarter as Serba Dinamik has changed its financial year end to June 30, 2021 from Dec 31, 2020 on May 7 this year.
On this note, TA Securities Research lowered Serba Dinamik’s FY2022-2023 order book assumption to RM5 bil (previously RM10 bil-RM12 bil) on the back of expectations that clients may refrain from awarding contracts to the company due to lack of confidence.
Following the downgrade in earnings, the research house retained its “sell” rating on Serba Dinamik with a lower target price of 25 sen (from 28 sen previously).
“Serba’s prospects appear murky at this juncture as it would take substantial effort to regain the confidence of authorities (ie Securities Commission and Bursa Malaysia), financiers, clients, investors, suppliers and other stakeholders,” added TA Securities Research.
HLIB Research also maintained its “sell” rating on Serba Dinamik with a lower target price of 24 sen (from 28 sen previously) based on 0.2 time FY2022F (from 0.3 time FY2021) book value per share (BVPS).
“We continue to assume that no dividends will be paid out in FY2022-2023,” added the research house.
At 9.50am, Serba Dinamik was down 1 sen or 2.99% to 32.5 sen with 47.8 million shares traded, thus valuing the company at RM1.21 bil. – Sept 30, 2021
