PETALING JAYA: The share price of Serba Dinamik Holdings Bhd plunged by nearly 70% after trading resumed from a long suspension, and amid the uncertainties surrounding the stock, investors are advised to wait for the company’s regularisation plan before investing in the stock.
Experts, including capital market regulator Bursa Malaysia, have highlighted the high risk in the stock, which resumed trading yesterday after being suspended for over six months.
Rakuten Trade head of equity sales Vincent Lau told StarBiz that investors should make their “informed decisions” based on the details of Serba Dinamik’s regularisation plan.
Serba Dinamik aims to announce its regularisation plan within the next eight months, which is necessary in accordance with the requirements under Practice Note 17 (PN17).
Serba Dinamik slipped into PN17 status in January, after its external auditor Nexia SSY PLT expressed a disclaimer of opinion over its audited financial statements for the 18-month financial period ended June 30, 2021.
Failure to submit a regularisation plan in time will result in the delisting of Serba Dinamik’s securities.
Lau said investors should look at Serba Dinamik’s plan to put its business back in order and address investors’ concerns.
“Investors must also look at whether there will be a white knight to save Serba Dinamik from its current condition,” he said.
Considering the high risk surrounding Serba Dinamik’s shares, brokerages have demanded cash upfront for the purchase of the company’s securities.
Serba Dinamik
Serba Dinamik was hammered heavily yesterday amid an exodus of shareholders, causing the counter to briefly hit a record low of 10 sen before closing at 11 sen.
The stock, which emerged as the most active counter, lost 68.6% in value just on the first day of resuming trading. A total of 580.93 million shares changed hands yesterday.
The proprietary day trading (PDT) and intraday short selling (IDSS) of Serba Dinamik’s securities were suspended yesterday.
In a special announcement, Bursa Malaysia said the suspension is due to the last done price of the approved securities dropping more than 15% from the reference price.
The short selling under PDT and IDSS will be activated today.
Fund manager Danny Wong also said that investors should wait for the regularisation plan if they wish to take a longer-term investment position.
“Investors ought to study whether the company can continue operating with the measures in the regularisation plan.
“Investors need to decide whether the plan is as good as what the company says it is. Without a concrete plan from the company, we cannot determine whether a stock is worth investing,” he added.
Wong, however, advised investors not to be involved in stocks embroiled with environmental, social and governance (ESG) issues.
“By choosing stocks that are not implicated in ESG issues, investors can minimise the risks on their part,” he said.
Both Lau and Wong agree that Serba Dinamik presents short-term trading opportunities but cautioned there are high risks involved.
Earlier, Bursa Malaysia advised investors to “exercise caution and to make informed decisions” in the trading of the Serba Dinamik stock.
Despite the risks, technical chartist and remisier Ridzuan Ibrahim told StarBiz that investors interested in the stock should “trade fast in, fast out”.
He noted that the selling pressure on the Serba Dinamik stock was “too strong”.
He also hinted that the worst is not over yet for the counter, after a massive selldown yesterday.
“All technical indicators show that the stock might fall below 10 sen. On the first day after trading resumed, there is no indication of improving buying sentiment,” he said.
When asked whether investors should consider buying the stock post-submission of the regularisation plan, Ridzuan said a regularisation plan alone is not sufficient.
“The company needs to grow convincingly once again, with new projects. We have to see whether Serba Dinamik can secure big projects domestically and internationally at the rate it did before,” he said.
Based on his experience monitoring local stocks since 1995, Ridzuan said companies that have been required to submit a regularisation plan typically do not return to their heyday.
“You need very good strategies to bring back life into the affected company. In the case of Serba Dinamik, it remains to be seen whether it will be another Sapura Energy Bhd,” he said.
Serba Dinamik stock has been suspended since Oct 27, 2021 after the company failed to comply with Bursa Malaysia’s directive to make public the findings from the Factual Findings Update (FFU) by its special auditor, Ernst & Young.
The suspension was lifted only after the FFU was finally announced by Serba Dinamik.
Serba Dinamik and its four top executives have been compounded RM3mil each by the Securities Commission (SC), in order to settle the criminal charges they face for submitting a false statement on revenue.
The four individuals are chief executive officer and group managing director Datuk Dr Mohd Abdul Karim Abdullah, executive director Datuk Syed Nazim Syed Faisal who was chief financial officer (CFO) from June 2016 until mid-2020, its current group CFO Azhan Azmi, and vice-president of accounts and finance Muhammad Hafiz Othman.
The SC said the compounds were made after the public prosecutor accepted the representation made to the Attorney General Chambers (AGC) by Serba Dinamik.
It was reported that the SC objected to the AGC’s decision to settle the criminal charges via compounds.