HAVING their grit tested to the limit as the share price of Serba Dinamik Holdings Bhd’s stocks seemed to have descended to its all-time low of 30.5 sen at the peak of its accounting debacle on June 30, yesterday’s (Sept 21) sudden rebound would have made many loyal investors feeling vindicated to say the least.
To recap, yesterday’s late buying amid a choppy sentiment pushed the stock 5 sen or 15.87% higher to end at 36.5 sen with 271.13 million shares traded which enabled Serba Dinamik to slightly recoup its market capitalisation to RM1.36 bil (which is still far from the RM6 bil prior to the flagging of accounting discrepancies in its FY2020 statutory audit).
But with two – not one – Swords of Damocles hanging over the stock, would it be too early to rejoice that the worst is now over for the global integrated oil & gas (O&G) service provider?
A check on Bursa Malaysia filing did not reveal anything fascinating except that the company’s co-founder and non-independent non-executive director Datuk Awang Daud Awang Putera has parted ways with 7.1 million shares due to forced selling which further reduced his stake in the company to 0.35%.
Recall that Awang Daud had also disposed of 3.7 million Serba Dinamik shares on Sept 14 for a similar reason.
Back to the Swords of Damocles issue, investors are undoubtedly keeping a close eye on the company’s FY2020 financial statement for the 18-month period ended June 30, 2021 which has to be released alongside the company’s annual report by Oct 31.
Both market documents – together with findings of the special independent review (SIR) by Ernst & Young Consulting Sdn Bhd (EY) – are seen as “precious commodities” given they seem to be holding share price of Serba Dinamik “at ransom” to a great degree.
Minority Shareholders Watch Group (MSWG) CEO Devanesan Evanson has raised concerns that Serba Dinamik has not announced an indicative date as to when the SIR report will be made available.
“The SIR is not an external audit of the financial statements and its scope is limited to the matters highlighted by KPMG (Serba Dinamik’s former external auditor),” Devanesan pointed out in a recent weekly newsletter.
“Surely, between the company and EY – by now – they should be able to iron out an indicative date for the release of the SIR report and the findings thereof.”
Devanesan added Serba Dinamik should provide an indicative date as to when the SIR report can be made available to provide some comfort to minority shareholders.
The MSWG’s head honcho further cautioned that there may be a risk that both the special independent reviewer (EY) and the external auditor (Nexia SSY PLT) are waiting for each other to finish their respective work so that they can rely on the other’s findings.
“However, the external auditor does not have the luxury of time due to the looming deadline,” he opined.
“As for the SIR, it would be perplexing if their report came out after the external audit report given that the former’s scope of work is limited to only to the truth and veracity of certain matters as opposed to the external auditor’s full audit of the financial statements.”
Whatever said and done, KnifeEdge summed up the fate of Serba Dinamik nicely in a reaction on the I3investor platform:
“Does yesterday’s breakout signal the very beginning of the end of the entire saga? That means all have been verified or compromised and sorted out and we are never going to see prices this low ever.
“Or is it a prelude to something beyond our expectations before the shock & awe announcement soon? Before the cloud clears out, it is deemed too high a risk as the wind may suddenly be U-turn sharp!
“Only the brave hearts or experienced traders with good capital risk control dare to chase for the potential high gains!”
At 9.16am, Serba Dinamik was down 1.5 sen or 4.11% to 35 sen with 38.59 million shares traded, thus valuing the company at RM1.3 bil.
