Serba Dinamik (Part 2)

Serba Dinamik (Part 2)

Serba Dinamik (RM1.61)

PE – 9

ROE – 19.04%

Net Profit Margin – 10.5%

Revenue is at historical high @ RM 6.01bil

Serba, a counter that AGAIN disappoint many investors, not because of the reported earnings, because of its non-performing share price. It was around RM3.00 from its peak and came down speedily since Dec 2019 to now RM1.61. Despite strong growth in earnings since 2016, from 2016 (RM144mil) to 2020-9 months (RM631mil) , stock price has been at the low zone and lower, and lower.

And now, the external auditor, KPMG, raised some questions to the management which are quite fishy. Some questions are as below in layman term (please refer to announcement for details)

  1. Are the contracts received from Serba’s customers genuine? (Future earnings might not be true, as KPMG raised questions related to the contracts on hand)
  2. Genuineness of Serba’s suppliers.
  3. Cannot confirm trade receivable from 11 customers (amount wasn’t mentioned), this means the Net Asset might not be true/lower.

 

What do all the above tell? That means Serba Dinamik’s financial reports maybe partially or totally madeup/”fake”. And this will be something disastrous to the investors.

Nevertheless, we cannot conclude anything at this juncture, where everything is still under investigation/review.

Only insiders know the truth. Some investment banks have already downgraded Serba to “Sell” after the news came out but….the stock has been suspended since Thursday 27/5/2021. How to sell?

While waiting for the independent review, let’s look at what can we, as retailers can do.

Scenario 1

Sell all/partial of your position once market open. (well, inevitably, the stock price will tumble quite a bit, be ready for it) – To do this, just close your eyes and sell no matter how painful you are. Good thing is, you will have worry free once all your position is sold (in case something unfavorable occur).

Scenario 2 

Hold your position even though it’s price drops when the market is re-open. If your position is very minimal to your portfolio, and your cost is rather low, you might hold the position and sit back to watch the outcome.

 

Scenario 3 

Buy more and go against the crowd if the price drops to an attractive level. To do this, ones have to have a huge conviction and trust on the stock, the company and also the boss (Karim)

 

1, 2 or 3?  You make your choice and let’s hope for a favourable outcome.

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