Silverlake Axis - RHB Securities 2015-09-21: Acquiring 100% Of SunGard Ambit


Silverlake Axis (SILV SP) - Acquiring 100% Of SunGard Ambit 

  • Silverlake will acquire 100% of SunGard Ambit, previously known as System Access, from SunGard Asia Pacific (SunGard) for USD12m. 
  • Maintain BUY, with a TP of SGD0.62 (from SGD0.58, 13.8% upside), implying 15x FY16 (Jun) P/E. 
  • In 2006, SunGard bought System Access for SGD120.2m. With this acquisition, the group will add more than 50 customers and extend its geographical reach to Eastern Europe, the Middle East and South Asia, which may lift its topline by 15%. 

 USD12m is a small price to pay. 

  • Silverlake Axis (Silverlake) intends to acquire 100% of Sungard Ambit for USD12m. Sungard Ambit, previously known as System Access, was previously listed on the Singapore Exchange and acquired by Sungard Asia Pacific (SunGard) in 2006 for SGD120.2m. Factoring in the research and development costs incurred in 2006-2015, we believe USD12m is an attractive price to pay. 

 May add 15% to topline immediately. 

  • This acquisition is expected to contribute approximately 15% to the revenue of the enlarged Silverlake Axis Group. It will also add more than 50 new customers to its current base of over 150 customers and extend its geographical reach to Eastern Europe, the Middle East and South Asia while strengthening its market leadership in South-East Asia. 
  • Based on the track record of its past acquisitions, we believe this acquisition will be immediately accretive and should contribute positively to its FY16 earnings. 

 Positive synergies from acquisition. 

  • This acquisition will include a complementary retail banking portfolio of software and service solutions, which would strongly position Silverlake for mid-tier customers while offering a broader variety of tiered deployment options from a technological and pricing perspective. 
  • The products can be deployed on open digital platforms – which would make it possible for Silverlake to address the needs of customers from mid-tier to large enterprises. The products could also deliver cost-saving synergies, especially at the top management level, and enable the company to cross-sell its existing products to new customers as a result of this acquisition. 
  • We raise our FY16 NPAT earnings projection by a modest 2%. 
  • Our TP rises to SGD0.62 from SGD0.58, based on 15x FY16 P/E, while our valuation is backed by a 6.7% FY16F dividend yield. Maintain BUY.

Jarick Seet RHB Securities | 2015-09-21
RHB Securities Analyst Report BUY Maintain BUY 0.62 Up 0.58