BUOYED by its recent 15 new oil & gas (O&G) service contracts wins valued at an estimated RM386.3 mil, shares of Serba Dinamik Holdings Bhd showed some resilience yesterday to withstand bearish sentiment on the local bourse.
The global integrated oil & gas (O&G) service provider chalked up 2 sen or 5% to 42 sen with 106.9 million shares traded, thus valuing the company at RM1.56 bil.
On Tuesday (Aug 11), Serba Dinamik announced that the company through its Malaysian and Indonesian subsidiaries has recently secured contracts in the areas of operations & maintenance (O&M) and engineering, procurement, construction and commissioning (EPCC).
According to KAF-Seagroatt & Campbell Securities Research, the latest development brings the group’s year-to-date (YTD) contract wins to circa RM1.3 bil which is still within the research house’s estimated replenishment assumption for 2021, taking note that a significant portion of the wins also comprises O&M contracts with undisclosed values.
“While the win is positive, the group’s near-term outlook remains uncertain as it is still awaiting an independent review by its advisor on its FY2020 annual report,” opined analyst Lim Sin Kiat in a recent company update.
To re-cap, Ernst & Young Consulting Sdn Bhd (EY) has been appointed by the group as an independent reviewer to assess the veracity and accuracy of audit matters highlighted by the company’s former external auditor KPMG PLT which has since resigned from the role.
While this will take time with an outcome anticipated in 4Q 2021, the research house expects heightened uncertainty to cloud the company’s outlook in the near term “until a favourable outcome is issued by the independent reviewer”.
Commenting on Serba Dinamik’s appointment of Nexia SSY PLT as its new external auditor to replace KPMG, KAF-Seagroatt & Campbell Securities Research described this as a small positive step to resolve the company’s accounting issues.
“(But) we believe it is still too early to provide a reliable judgement on the future accuracy and veracity of the company’s accounts,” noted the research house.
Another uncertainty that has to be cleared before Serba Dinamik is able to rebound from its depressed valuation is the outcome of its lawsuit against KPMG, added KAF-Seagroatt & Campbell Securities Research.
All-in-all, the research house retained its “hold” rating on the company with a target price of 38 sen. In comparison, PublicInvest Research accorded Serba Dinamik a target price of 44 sen with a “neutral” call based on a discount of 50% to its trailing 12-month book value of 0.88. – Aug 13, 2021
