PETALING JAYA: Embattled Serba Dinamik Holdings Bhd’s share price increased by more than a quarter in a day but the stock still has a long way to go to recoup over RM4bil in lost market capitalisation.
The strong surge in share price happened as investors reacted positively to the formal appointment of Ernst & Young Consulting Sdn Bhd (EY) as the group’s special independent reviewer.
The oil and gas engineering services company was also the most actively traded stock on Bursa Malaysia yesterday.
The share price, which traded in the range of 39.5 sen to 51.5 sen, closed higher by 25.97% or 10 sen at 48.5 sen.
A total of 1.49 billion shares changed hands.
Serba Dinamik counter has been on the uptrend for four consecutive trading days, including yesterday.
Nevertheless, the shares are still 70% down from the last price level of RM1.61 on May 25, the day the group announced that its external auditor KPMG had raised an issue on some matters pertaining to an audit.
On May 25, the company was valued at just over RM6bil. However, this has dropped to about RM1.8bil as of yesterday.
EY will undertake a special independent review of the audit matters raised by KPMG.
In a stock exchange filing made last Friday, Serba Dinamik said “EY is fit for the engagement as it is a reputable Big Four firm of auditors.”
“The appointment of EY is also made under the directive from Bursa Malaysia pursuant to paragraphs 2.23 and 2.24 of the Main Market Listing Requirements of Bursa Malaysia, ” it added.
KPMG resigned as the external auditor following an announcement by Serba Dinamik that it would file a legal action against KPMG.
According to Reuters, the auditor had raised issues on over more than RM3.5bil of contracts and transactions that it had not been able to verify with 11 customers.
Following this development, Serba Dinamik had suffered several rating downgrades as scrutiny intensified on the company’s financials.S&P Global Ratings has downgraded Serba Dinamik’s long-term credit rating to “B-” from “B+”. A similar downgrade was done for the long-term issue ratings on the company’s guaranteed sukuk.
This was due to reduced funding access faced by Serba Dinamik.
S&P Global Ratings also put the group on credit watch negative on rising refinancing risks.
Meanwhile, research houses such as AmInvestment Bank Research, RHB Research and Kenanga Research had also downgraded their calls on Serba Dinamik.