KUALA LUMPUR: Kenanga Investment Bank Research has downgraded Serba Dinamik
to underperform from outperform after the company announced its external auditors, KPMG, had flagged some matters pertaining to statutory audit.
In its research note on Thursday, it said Serba Dinamik was in the midst of appointing an independent firm to commence a special independent review.
“The emergence of this issue has created uncertainties over the 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. Downgrade to underperform from outperform, target price 95 sen, ” it said.
Recall that earlier in the month, the group announced that it has changed its financial year end to June 2021, from December 2020, as according to management, it did not manage to finalise its audited accounts on time, the audit process hampered as it were, by the movement restrictions globally, coupled with the implementation of the MCO in Malaysia.
“From what we gathered, the external auditors of KPMG met with some issues pertaining to the group’s operational procedures. To address these issues, the group is currently in the midst of appointing an independent firm (likely another audit firm) to conduct a special review on these matters, ” it said.
Kenanga Research said in the best case scenario, the external auditors will be satisfied with the independent review and management’s compliance to the inquest and sign off the upcoming FY2021 (June) audited accounts.
However, in the worst case scenario, should the auditors uncover any discrepancies, it believes a qualified audit report could be possible.
