SILVERLAKE AXIS LTD
5CP.SI
Silverlake Axis (SILV SP) - Positive Catalysts Ahead
- Silverlake should book steady growth in FY16, despite banks cutting their capex and focusing more on maintenance and enhancement services.
- Management expects major capex spending to likely continue in 2017.
- In view of the positive 1Q16 results, coupled with catalyst-like potential share buybacks ahead, the Deloitte audit report and an attractive FY16F (Jun) dividend yield of 5.5%, we maintain BUY with a SGD0.75 TP (7% upside) based on 17x FY16F P/E.
Positive 1Q16 aided by FX gains.
- Silverlake Axis’ (Silverlake) positive 1Q16 results were partially aided by a MYR14.2m forex gain, with the appreciation of the SGD and the USD against the MYR.
- Its 3Q15 revenue rose 12.7% YoY to MYR131m while net profit after tax (NPAT) rose 14.9% YoY to MYR68.6m.
- Its maintenance and enhancement services segment continued to see a strong growth of 23% YoY while its software project services units also surged 109% YoY.
Positive catalysts to come – share buybacks & Deloitte report.
- So far in 2015, Silverlake has spent SGD15m on share buybacks. Management has guided that these buybacks would likely continue going forward.
- The Deloitte audit, which commenced fieldwork six weeks ago, is likely be completed by the end of November.
Positive synergies from acquisition.
- This acquisition will bring along a complementary retail banking portfolio of software and service solutions, strongly positioning Silverlake Axis for its mid-tier customers while offering a broader variety of tiered deployment options from a technology and a pricing perspective. These products can be deployed on open digital platforms, thereby making it possible for Silverlake Axis to address the needs of customers from mid-tier to large enterprises.
- Going forward, management expects the merged synergies to result in some positive cost savings and margin improvements for Sungard Ambit of about 10- 15% in the first year.
Maintain BUY with a TP of SGD0.75.
- With the positive catalysts ahead and backed by a c.MYR200m orderbook, coupled with an attractive dividend FY16F yield of 5.5%, we maintain BUY on Silverlake, based on a 17x FY16F P/E.
Jarick Seet
RHB Research
|
http://www.rhbinvest.com.sg/
2015-12-02
RHB Research
SGX Stock
Analyst Report
0.75
Same
0.75
