-->

Silverlake Axis - CGS-CIMB Research 2021-05-12: Gradual Recovery Taking Shape

SILVERLAKE AXIS LTD (SGX:5CP) | SGinvestors.io SILVERLAKE AXIS LTD (SGX:5CP)

Silverlake Axis - Gradual Recovery Taking Shape

  • Silverlake Axis's 3QFY21 net profit of RM38.7m (+12% q-o-q, +52% y-o-y) below expectations due to slower-than-expected recovery in project-related revenue.
  • Order win momentum remains positive and should support sequential earnings recovery in upcoming quarters.
  • Maintain ADD with a lower target price of S$0.31, still based on 14.2x CY22F P/E.



Silverlake Axis's 3QFY21 below expectations

  • Silverlake Axis (SGX:5CP)'s 3QFY21 (Jan 2021 to Mar 2021) core net profit of RM38.7m (+12% q-o-q, +52% y-o-y) was below expectations; 9M core net profit made up 64%/66% of our/Bloomberg consensus FY21F forecasts.
  • Topline remained weak (-12% q-o-q, -7% y-o-y) as project-related revenue saw continued weakness. This was mitigated by higher GPM (+6.4% points y-o-y) due to changes in sales mix and lower opex as a result of cost rationalisation activities implemented.


Positive updates on order wins

  • Order win momentum remains positive; Silverlake Axis shared that it has secured RM74m worth of deals in 3Q, bringing year-to-date wins to RM225m (FY20: RM220m).
  • Product strategy has demonstrated some early success, with the booking of first DPS Digital upgrade contract (Silverlake Axis has announced end-of-life for one of its existing products by end-2023, which opens up order opportunities of RM100m-150m).
  • Mobius, Silverlake Axis’s new cloud-based core banking system (CBS), has seen active enquiries, and contracting is under way for its first order win from a tier-one bank in the region.
  • Silverlake Axis is also engaged with several digital banking prospects in Malaysia, which could open up potential for future order wins.

Reiterate ADD with lower target price of S$0.31






ONG Khang Chuen CFA CGS-CIMB Research | Andrea CHOONG CGS-CIMB Research | https://www.cgs-cimb.com 2021-05-12
SGX Stock Analyst Report ADD MAINTAIN ADD 0.31 DOWN 0.320



Advertisement



MOST TALKED ABOUT STOCKS / REITS OF THE WEEK



loading.......