Friday, December 13, 2013

Silverlake : Order please! (CIMB)

Silverlake Axis Ltd
Current S$0.84
Target S$0.95
Order please!

The key short-term catalyst will be the much-anticipated order from a bank in Malaysia. Balance sheet remains strong to support potential acquisitions. Longer term, Silverlake Axis itself could become a takeover target.

The immediate catalyst for Silverlake Axis is a potential RM200-300m order win. If successful, this will add to the earnings growth over the next two to three years. Earlier newsflow on the possibility of a listing of its Chinese associate is another potential catalyst. Our DCF-based target price is S$0.95 (WACC 7.5%). Under our new rating structure, our recommendation changes from Outperform to Add.


Possible new order
Silverlake is working on a major order from a bank in Malaysia. We believe the contract size could be around RM300m. If successful, the order win could be announced within the next few months. Other new mandates under negotiation include: 1) orders from an Islamic bank, 2) credit card solutions for a bank in Thailand and 3) payment projects for a client in HK. These orders could be in the range of RM50m-60m each.

Strong balance sheet, higher dividend payout
Its balance sheet remains strong with net cash of RM373.3m. In 1QFY14, net cash from operations was RM64.4m. The company continued its track record of quarterly dividend payouts and declared a DPS of 0.8 Scts in 1QFY6/14 (1QFY13: 0.5 Scts).

Potential takeover target
Given its established core banking software solutions, extensive presence in the ASEAN market and successful ASEAN-wide implementation for various financial clients, Silverlake Axis could well be on the radar of any company looking for a presence in Asia.




Source/Extract/Excerpts/来源/转贴/摘录: CIMB-Research,
Publish date: 29/11/13

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