KUALA LUMPUR: Serba Dinamik Holdings Bhd's move to appoint Ernst & Young Advisory Services Sdn Bhd (EY) as its independent reviewer and three independent directors and non-executive directors to the board could instil confidence in shareholders.
Hong Leong Investment Bank Bhd (HLIB) said the appointment to assess veracity and accuracy of its audit issues was a positive step for Serba Dinamik due to EY's credibility as one of the top four accounting firms.
The oil and gas (O&G) services company had also appointed three individuals to its board namely Datuk Mohamed Ilyas Pakeer Mohamed, Masleena Zaid and Johan Mohamed Ishak as independent directors effective from last Friday.
"The appointment of Masleena, who is the managing partner of Messrs Masleena, Yee & Partners is a positive step for Serba Dinamik as she was previously the head of section at the Companies Commission of Malaysia from July 2008 to December 2009 and prosecuting officer at the Securities Commission between February 2001 and June 2008," said HLIB Research analyst Low Jin Wu.
He said the move signalled Serba Dinamik's commitment to proving the company was free from any wrongdoing.
However, HLIB said volatility would ensue until the independent audit process was resolved.
Although Serba Dinamik has shown some positive moves to clear its name, the independent audit will take at least three months to complete its auditing.
"We believe investors would not be ready to jump the gun completely just yet. Until the accuracy and veracity of the accounting matters are resolved, we believe volatility will ensue," he said.
HLIB has upgraded its call from sell to hold at an unchanged target price of 78 sen, despite share price having fallen and slightly breaking below its forecast.