Target Price: Under Review
Stellar 4QFY13 Results
In line with expectation, SILV reported stellar 4QFY13 results with PATAMI of MYR59.8m (+31.4% y-o-y) on the back of a MYR110.2m revenue (+14.6% y-o-y). With the final dividend of 1.1 cent, the stock is now trading at an attractive 4.1% yield with strong growth potential. We put our forecasts and TP under review pending the company’s analysts briefing. Our most recent TP was SGD0.82. Maintain BUY.
• Revenue flat. Silverlake Axis (SILV)’s FY13 revenue came in flat y-o-y at MYR398.6m as a result of the decline in hardware sales (-80% y-o-y) as well as the fall in contribution of software project services (-44% y-o-y). We see no signs of concern as hardware sales hardly generated any profits during the year while the amount of software project related work performed through the year was low as most of the major projects – for CIMB Thailand, CIMB Singapore, Thanachart-Siam City Bank and Hong LeongEON Bank – were already close to the completion. On the other hand, SILV saw strong revenue growth in software licensing (+89% y-o-y), healthy revenue increase in maintenance services (+18% y-o-y) as well as the fresh contribution from the group’s newly acquired insurance software business.
• Profitability rockets. The change of revenue mix as a result of major project completions resulted in a jump in software licensing revenue, which in turn drove up the margins and profitability. Both the FY13 gross and net profit margins jumped by 9ppts to 63% and 49% respectively.
• Yield at an attractive 4.1%. In view of its record profitability and robust balance sheet, the group declared a final dividend of 1.1 cents/share, largely in line with our expectation. The full-year FY13 dividend aggregate of 3.1 cents/share translates to an attractive yield of 4.1%, based on the stock’s last closing price of SGD0.75.