KUALA LUMPUR (June 15): Serba Dinamik Holdings Bhd's share and warrant prices fell in morning trade on Bursa Malaysia today on profit taking after the engineering solutions provider’s securities rose yesterday following the company’s announcements of, among others, the appointment of Ernst & Young Advisory Services Sdn Bhd (EY) as an independent reviewer to assess accuracy of matters highlighted by the company's external auditor KPMG PLT.
At 10.27am today, Serba Dinamik’s share price had fallen six sen or 8.05% to 68.5 sen, while its warrants dropped half a sen or 4% to 12 sen. At 68.5 sen, the company had a market value of about RM2.54 billion.
Serba Dinamik shares and warrants were Bursa’s most-actively traded securities so far, with about 294 million and 114 million units changing hands respectively.
Yesterday, the company's share price closed up 14 sen at 74.5 sen, while its warrants rose four sen to 12.5 sen.
Serba Dinamik’s share price previously stood at RM1.61 on May 25.
According to its filings with Bursa in December 2019, the warrants, also known as 5279WA, were issued and listed on Dec 6 and 13, 2019 respectively in conjunction with the issuance of 881.1 million free warrants in Serba Dinamik.
The maturity date of the warrants is Dec 5, 2024, according to the company.
Besides Serba Dinamik's Bursa filing yesterday on the appointment of EY, its separate filings on the appointment of three independent directors could have also led to the group's share and warrant price rise yesterday.
The company said it last Friday appointed Datuk Mohamed Ilyas Pakeer Mohamed, Masleena Zaid and Johan Mohamed Ishak as independent and non-executive directors of the company, which offers engineering solutions to industries including the oil and gas (O&G) besides electricity-generation sectors.
Today, Hong Leong Investment Bank Bhd (HLIB) analyst Low Jin Wu wrote in a note that HLIB believes the appointment of EY and the three independent directors "is a positive step forward for Serba Dinamik as it displays confidence to shareholders”.
However, HLIB believes that “[share price] volatility will ensue until the independent audit process is resolved", according to Low, who also said the research house had upgraded its Serba Dinamik share call from "sell" to "hold", with an unchanged target price (TP) of 78 sen.
According to him, HLIB believes that the appointment of EY as an independent reviewer is a positive step for Serba Dinamik due to EY’s credibility as one of the Big Four accounting firms.
Among the three new independent directors of Serba Dinamik, Low said Masleena’s appointment is especially a positive step for the company as she was previously the Companies Commission of Malaysia's section head and a prosecuting officer of the Securities Commission Malaysia (SC).
One of Serba Dinamik’s filings shows that Masleena is now the managing partner of law firm Masleena, Yee & Partners.
Serba Dinamik has been in the news since the end of May, when the company announced that the external auditor had informed the firm of some matters pertaining to its statutory audit.
According to Serba Dinamik’s Bursa filing on May 25, the company was in the midst of appointing an independent firm to commence a special independent review to assess the accuracy of the matters.
On May 28, Serba Dinamik said in a response to Bursa’s query that the matters highlighted by the external auditor on May 3 relate to, among others, certain customers’ confirmation relating to sales transactions and trade receivables.
The matters highlighted by the external auditor include "trade receivables balances and sales transactions for information technology contracts”, the company added.