PETALING JAYA: Shares of Serba Dinamik Holdings Bhd and stocks linked to it, namely, KPower Bhd and Sarawak Consolidated Industries Bhd (SCIB) continued to be pummeled as issues surrounding the oil and gas company continue to weigh on it.
All three stocks finished the day in the red with Serba Dinamik ending 19% lower to 62 sen while KPower and SCIB closed down 7% and 8.6% to RM1.04 and 85 sen respectively, in an overall market which ended the day higher.
The three companies have a common major shareholder in the form of Serba Dinamik group managing director and chief executive officer Datuk Mohd Abdul Karim Abdullah.(pic below)
Serba Dinamik’s issues started a couple of weeks ago when its long-time external auditor KPMG sounded alarm bells on some of its past sales transactions and trade receivables.Since then, a host of developments have occurred including Serba Dinamik’s second largest shareholder wanting to replace KPMG and then later withdrawing that intention.
Serba Dinamik has also recently been reported to be in the process of having its alleged financial-related issues being investigated by the Securities Commission.
“All these are causing too much discomfort among investors who are dumping the shares as a result, ” said one fund manager who declined to be named.
Serba Dinamik has lost billions of ringgit in terms of market capitalisation in the past week or so.
Based on its last traded price, the company is valued at RM2.3bil, a far cry from the RM6bil it was valued at, just before these developments came into light.
The stock, which was a favourite among analysts in the past has now been given a “sell” call by most.
To be sure, not too long ago, most had upgraded the stock stating that they expected “record earnings” from Serba Dinamik this year.
In its note to clients, Kenanga Research said the emergence of this issue have created uncertainties over reported financial statements.
As such, we recommend investors to avoid the name for the time being, and wait for further announcements as the situation develops, it said, downgrading the stock to “underperform” from “outperform”.
AmInvestment Bank’s research unit said it was downgrading Serba Dinamik from “buy” to “sell” with a lowered fair value of RM1.26 per share from an earlier RM2.40 per share.
“In our view, Serba Dinamik’s valuations appear precarious pending the outcome of the special audit, ” it told its clients in a report.
In his defence, Abdul Karim has said that the company’s fundamentals remain sound and that the company “has done no wrong.”
Serba Dinamik has also said that it has provided explanations on all the issues raised to the relevant parties.