KUALA LUMPUR (Nov 25): Public Investment Bank's research arm PublicInvest Research is ceasing its coverage on Serba Dinamik Holdings Bhd as it said earnings visibility is likely to be limited and given the need to redeploy the investment bank's resources internally.
In a research note on Thursday, Public Investment Bank said it was unable to appropriately assess Serba Dinamik's prospects in the near to medium term given the heightened uncertainties as a result of accounting related queries, legal challenges with auditors namely KPMG and Ernst & Young Consulting Sdn Bhd (EY) as well as the regulator.
"Our last call is 'neutral' with a target price of RM0.31 based on a 0.3x multiple to its financial year ended June 30, 2021 book value of RM1.05. Earnings estimates should no longer be relied on as basis of investment decisions,” the investment bank said.
Shares of Serba Dinamik have been suspended since Oct 22, of which Bursa Securities cited paragraph 16.02(1)(c) of the Main Market Listing Requirements in the interest of maintaining an orderly and fair market in the trading of the company’s securities.
This came as a result of a directive by the regulator to disclose findings of the special independent review pursuant to Paragraph 2.23(1) of the Main Market Listing Requirements, which Serba Dinamik declined to do, contending that EY was still in the midst of performing the special independent review.
"Subsequent to this, Serba Dinamik has missed coupon payments for its US$300 million coupon, though the company has indicated that it will make good the payments within the one-month grace period under the terms of agreement," Public Investment Bank said.
Meanwhile, Serba Dinamik chairman Datuk Mohamed Ilyas Pakeer Mohamed and an independent director Johan Mohamed Ishak had resigned, citing that Bursa Malaysia’s most recent stipulations had stopped them from fairly discharging their duties.
Serba Dinamik has appointed Datuk Seri Mohamed Farid Abu Hassan as its new chairman.
Bursa Malaysia had, on Nov 22, announced that it was seeking a court order to compel Serba Dinamik to disclose updates on the findings of the special independent review.