Serba Dinamik shares continue to be suspended

Serba Dinamik – which has long been a darling of investors known for its steady increases in earnings even in tough times – said it was appointing an independent firm for a special independent review to assess the veracity and accuracy of the matters.

KUALA LUMPUR: Trading in the securities of Serba Dinamik Holdings Bhd continued to be suspended on Friday at the company’s request.

In a statement to Bursa before market opened, it said Bursa Malaysia Securities had approved the company's request for suspension of trading on Friday.

The voluntary suspension was pending the release of further clarification of the announcement made on May 25.

The integrated engineering solutions provider had requested for the suspension on Thursday.

Serba Dinamik was hit by a slew of downgrades after the company announced its external auditors had questions over its financial accounts.

StarBiz reported the stock was suspended pending an announcement on Thursday but shares of the companies where Serba Dinamik group managing director and chief executive officer Datuk Mohd Abdul Karim Abdullah is a substantial shareholder of, saw heavy selling pressure.

On Tuesday, the company which provides integrated engineering solutions to many industries including the oil and gas, petrochemical and power generation industries told Bursa Malaysia that its board of directors was informed by external auditors on “some matters pertaining to statutory audit.”

Consequently, Serba Dinamik – which has long been a darling of investors known for its steady increases in earnings even in tough times – said it was appointing an independent firm for a special independent review to assess the veracity and accuracy of the matters.

Meanwhile PublicInvest Research said on Friday it was understood that investigation is currently on-going, which also involves some other regulatory bodies.

“While the group’s management has clarified there is neither fraud nor any wrongdoings involved in the course of business during a specially-arranged briefing which was attended by c.200 people, the request for a special audit review has nonetheless raised concerns on governance-related risks.

“No specific timeline been given though the plan currently is to appoint an independent auditor soonest possible.

“With these issues likely to take a while to resolve and pending its outcome, we are compelled to tag lower earnings multiple to our estimates to account for a potential financial reporting quality risk factor. Earnings estimates are unchanged at this juncture, as business continues to run as usual.

“We cut our TP to RM1.39 (from RM2.37 previously), based on a -2SD 3-year PER multiple of 7.5x. Our call is also lowered to Neutral, ” PublicInvest Research said..