Serba Dinamik Holdings Berhad

The Downfall of $SERBADK / 5279 (SERBA DINAMIK HOLDINGS BERHAD)

$SERBADK / 5279 (SERBA DINAMIK HOLDINGS BERHAD), once a powerhouse in the Malaysian stock market, faced a dramatic fall from grace when it was delisted on June 5, 2024, following an accounting scandal. This company, which had been a darling among investors for its low valuations and strong growth narrative, saw its revenues and profits consistently reach new heights, securing numerous contracts along the way. However, when allegations of fraudulent accounting emerged in 2021, its stock price collapsed, leading to significant financial losses.

Why did no one anticipate the risk of accounting fraud? Companies involved in such scandals often project an image that appeals to both institutional and retail investors, concealing the reality until the scandal is exposed, revealing that the impressive contracts and profits were mere fabrications.

Companies entangled in accounting scandals often exhibit several common red flags:

1. Rapid Growth Paired with Rising Debt: From its IPO in 2017 until 2020, Serba Dinamik's revenue and profits consistently broke records. However, the company’s bank loans surged at an alarming rate, leading to severe cash flow issues. Over the years, Serba Dinamik frequently resorted to private placements to manage its mounting debt.

2. Questionable Contracts: On April 15, 2020, during the pandemic, Serba Dinamik secured a RM 7.71 billion contract from the American company BLOCK 7 to build an innovation and academic center in Abu Dhabi, UAE. Given the global economic situation at the time, this contract raised doubts about its legitimacy, especially since the company lacked the operating capital to complete the project.

3. Inflated Receivables and Contract Assets: Both trade receivables and contract assets saw significant increases. While the business appeared to be expanding, collecting payments from customers became increasingly challenging.

4. Unrealistic Profitability During Industry Downturn: The 2020 pandemic led to widespread declines in profits within the oil and gas sector, yet Serba Dinamik’s profits continued to soar. This anomaly seemed counterintuitive and raised suspicions. The phrase "too good to be true" aptly describes Serba Dinamik during this period, as the company’s ability to maintain profitability while the global oil and gas industry struggled defied logic.

When evaluating a company’s fundamentals, investors should always consider the performance of its peers. If a company stands out significantly, there must be a strong underlying reason. However, even the most impressive capabilities are futile in the face of an unfavorable market trend. If an entire industry is in decline, yet one company continues to thrive, investors should critically assess what makes that company shine so brightly in a struggling sector.

$SERBADK / 5279 (SERBA DINAMIK HOLDINGS BERHAD)

$SERBADK / 5279 (SERBA DINAMIK HOLDINGS BERHAD)

KUALA LUMPUR: Serba Dinamik Holdings Bhd, once a darling of the local stock market, will be delisted tomorrow. 

© New Straits Times Press (M) Bhd

PRACTICE NOTE 17 / GUIDANCE NOTE 3 : SUSPENSION AND/OR DELISTING

MATERIAL LITIGATIONSERBA DINAMIK HOLDINGS BERHAD ("SDHB" OR "THE COMPANY") (IN LIQUIDATION)
Originating Summons (High Court of Malaya at Kuala Lumpur Suit No. WA- 24MFC-52-02/2023)
Application for Execution No. WA-38-799-03/2024
Public Islamic Bank Berhad (Plaintiff)
Serba Dinamik Sdn Bhd (In Liquidation) (Defendant)

Quarterly rpt on consolidated results for the financial period ended 31/03/2024

KUALA LUMPUR: Serba Dinamik Holdings Bhd says it will appeal a decision by Bursa Malaysia to delist the company on June 5 for not submitting its regularisation plan.

© New Straits Times Press (M) Bhd

PRACTICE NOTE 17 / GUIDANCE NOTE 3 : SUSPENSION AND/OR DELISTING

OTHERSSERBA DINAMIK HOLDINGS BERHAD ("SDHB" OR "THE COMPANY") (IN LIQUIDATION)
MONTHLY ANNOUNCEMENT ON THE STATUS OF DEFAULT IN PAYMENT PURSUANT TO PARAGRAPH 9.19A OF THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD ('BURSA SECURITIES")

KUALA LUMPUR: Serba Dinamik Holdings Bhd will be removed from the Official List of Bursa Malaysia Securities Bhd effective June 5.

KUALA LUMPUR: Serba Dinamik Holdings Bhd will be removed from the official list of Bursa Malaysia Securities Bhd effective June 5.

© New Straits Times Press (M) Bhd

DE-LISTING OF SERBA DINAMIK HOLDINGS BERHAD (IN LIQUIDATION)

MATERIAL LITIGATIONSERBA DINAMIK HOLDINGS BERHAD ("SDHB" OR "THE COMPANY") (IN LIQUIDATION)
Writ of Summons and Statement of Claim (High Court of Malaya at Johor Bahru Suit No. JA-22NCvC-68-05/2022)
Perisind Samudra Sdn Bhd (Plaintiff)
Serba Dinamik Sdn Bhd (In Liquidation) (1st Defendant)
Serba Dinamik Group Berhad (In Liquidation) (2nd Defendant)
Serba Dinamik Development Sdn Bhd (In Liquidation) (3rd Defendant)

MATERIAL LITIGATIONSERBA DINAMIK HOLDINGS BERHAD ("SDHB" OR "THE COMPANY") (IN LIQUIDATION)
Writ of Summons and Statement of Claim (High Court of Malaya at Johor Bahru Suit No. JA-22NCvC-67-05/2022)
Izin Budi Sdn Bhd (Plaintiff)
Serba Dinamik Sdn Bhd (In Liquidation) (1st Defendant)
Serba Dinamik Group Berhad (In Liquidation) (2nd Defendant)
Serba Dinamik Development Sdn Bhd ("SDDSB") (In Liquidation) (3rd Defendant)

MATERIAL LITIGATIONSERBA DINAMIK HOLDINGS BERHAD (SDHB OR THE COMPANY) (IN LIQUIDATION)
Originating Summons (High Court of Malaya at Kuala Lumpur Suit No. WA-24M-9-04/2023)
Bank Pembangunan Malaysia Berhad ("BPMB")
Serba Dinamik Sdn Bhd (In Liquidation) ("SDSB")

WINDING UP / RECEIVER & MANAGER / RESTRAINING ORDER / SPECIAL ADMINISTRATORSERBA DINAMIK HOLDINGS BERHAD ("SDHB" OR "THE COMPANY") (IN LIQUIDATION)
Winding Up Petition (High Court of Malaya at Shah Alam Winding Up Petition No. BA-28NCC-619-11/2023)
Kawalan Keselamatan Prestasi Mewah Sdn Bhd (Petitioner)
SDMAX Sdn. Bhd. (Respondent)

PRACTICE NOTE 17 / GUIDANCE NOTE 3 : MONTHLY ANNOUNCEMENT

OTHERSSERBA DINAMIK HOLDINGS BERHAD ("SDHB" OR "THE COMPANY") (IN LIQUIDATION)
MONTHLY ANNOUNCEMENT ON THE STATUS OF DEFAULT IN PAYMENT PURSUANT TO PARAGRAPH 9.19A OF THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD ("BURSA SECURITIES")

MATERIAL LITIGATIONSERBA DINAMIK HOLDINGS BERHAD ("SDHB" OR "THE COMPANY") (IN LIQUIDATION)
Originating Summons (High Court of Malaya at Kuala Lumpur Suit No. WA- 24MFC-52-02/2023)
Application for Execution No. WA-38-798-03/2024
Application for Execution No. WA-38-799-03/2024
Public Islamic Bank Berhad (Plaintiff)
Serba Dinamik Sdn Bhd (In Liquidation) (Defendant)

MATERIAL LITIGATIONSERBA DINAMIK HOLDINGS BERHAD ("SDHB" OR "THE COMPANY") (IN LIQUIDATION)
Writ of Summons and Statement of Claim (High Court of Malaya at Johor Bahru Suit No. JA-22NCvC-68-05/2022)
Perisind Samudra Sdn Bhd (Plaintiff)
Serba Dinamik Sdn Bhd (In Liquidation) (1st Defendant)
Serba Dinamik Group Berhad (In Liquidation) (2nd Defendant)

$SERBADK / 5279 (SERBA DINAMIK HOLDINGS BERHAD)

KUALA LUMPUR: Bursa Malaysia has granted Serba Dinamik Holdings Bhd another extension to submit its regularisation plan, which was due Jan 6, 2024.

© New Straits Times Press (M) Bhd

Practice Note 17 (PN17) company Serba Dinamik Holdings Bhd has obtained another extension from Bursa Malaysia to submit its regularisation plan.

PARAGRAPH/RULE 8.03A COMPANIES : OTHERS

Identifying Potential 'Atomic Bombs': Occurrences That Causes Collapse 💣💥

Financial reports released quarterly and annually serve as vital tools for understanding a company's performance. However, recent events, such as $SERBADK / 5279 (SERBA DINAMIK HOLDINGS BERHAD)'s accounting fraud and panic selling earlier in 2024, have prompted us to exercise greater caution when investing. It's important to remain vigilant of certain indicators that may signal potential issues within a company's financial reporting. It's worth noting that this does not automatically imply deceit in the company's financial reports. Rather, this post aims to encourage investors to be more mindful of these occurrences for their own benefit.

Here are some key points to consider:

1. Change in Financial Year End:
$YNHPROP / 3158 (YNH PROPERTY BERHAD) shifted its financial year end from December 31, 2022, to June 30, 2023. In my view, such changes are often a response to potential concerns raised by external auditors and can be seen as a method to "buy time."

2. Auditor's Qualified Opinion:
On October 23, $YNHPROP / 3158 (YNH PROPERTY BERHAD)'s external auditor, Baker Tilly, issued a qualified opinion regarding the group's financial statements for the 18-month period ending June 30, 2023. This opinion was related to joint ventures and turnkey contracts for property development. Baker Tilly cited a "basis for qualified opinion," noting an inclusion of RM1.1 billion in YNH's inventories related to contracts with JV parties or landowners.

In response, YNHPROP has engaged external firms to conduct a special review and provide legal opinions on the Joint Venture Agreements and contracts. This review is expected to conclude by April 2024.

3. Resignation of Independent Non-Executive Directors:
Additionally, in October 2023, $YNHPROP / 3158 (YNH PROPERTY BERHAD) witnessed the resignation of two independent non-executive directors, Ching Nye Mi and Ding Ming Hea. YNHPROP stated in response that "The announcements on the Change in Boardroom have clearly stated that both independent non-executive directors have served the Board for more than 12 years and their resignation was in line with the mandatory 12 years tenure limit for Independent Director under the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, which came into effect on 1 June 2023."

In conclusion, it is not suggested that $YNHPROP / 3158 (YNH PROPERTY BERHAD) is engaging in accounting fraud. Rather, these events serve as early indicators for investors to make informed decisions and potentially avoid losses, particularly as these events transpired before 2024.

MATERIAL LITIGATIONSERBA DINAMIK HOLDINGS BERHAD ("SDHB" OR "THE COMPANY") (IN LIQUIDATION)
Update on Winding Up Petition served by HSBC Amanah Malaysia Berhad, Ambank Islamic Berhad, Bank Islam Malaysia Berhad, MIDF Amanah Investment Bank Berhad, Standard Chartered Saadiq Berhad and United Overseas Bank (Malaysia) Bhd (collectively, "Syndicated Lenders")

MATERIAL LITIGATIONSERBA DINAMIK HOLDINGS BERHAD ("SDHB" OR "THE COMPANY") (IN LIQUIDATION)
Originating Summons (High Court of Malaya at Kuala Lumpur Suit No. WA-24M-9-04/2023)
Bank Pembangunan Malaysia Berhad (BPMB)
Serba Dinamik Sdn Bhd (In Liquidation) (SDSB)

PRACTICE NOTE 17 / GUIDANCE NOTE 3 : MONTHLY ANNOUNCEMENT

OTHERSSERBA DINAMIK HOLDINGS BERHAD ("SDHB" OR "THE COMPANY") (IN LIQUIDATION)
MONTHLY ANNOUNCEMENT ON THE STATUS OF DEFAULT IN PAYMENT PURSUANT TO PARAGRAPH 9.19A OF THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD ("BURSA SECURITIES")