Friday, November 15, 2013

Silverlake : Higher dividends & healthy pipeline (DBSV)

Silverlake Axis
BUY S$0.84
STI: 3,186.12
Price Target: 12-month S$0.90 (Prev S$0.82)
Higher dividends & healthy pipeline

• 1Q14F profit of RM51.2m (+29% y-o-y,-14% q-oq) was 8% above our estimate due to forex gains. Interim DPS of 0.8 Scts (+60% y-o-y) was another positive surprise

• FY14F/15F EPS raised 5%/8% on the back of forex gains in FY14F, followed by higher licensing revenue in FY15F.

• Maintain BUY at higher TP of S$0.90. The stock offers double-digit growth potential with 4% yield.

Forex gains and dividends
Other income rose to RM8.2m from RM2.5m a year earlier due to the appreciation of SGD and USD cash balances and receivables against the Ringgit. Interim DPS of 0.8 Scts (+60% y-o-y) indicates that annual DPS could exceed our previous 3.2 Scts forecast (3.8% yield), as SILV typically pays a higher DPS in the final quarter. Group revenue rose a healthy 27% y-o-y with software project services as the major driver, which should be followed by higher maintenance revenue

Backlog of ~RM300m at the end of 1Q14 provides over 12-month visibility
The backlog is slightly reduced from ~Rm325m at the end of FY13 and contains a mix of licensed & project revenue (excluding ~Rm200m of maintenance revenue). We project the backlog to be boosted by a big order win of ~RM200m from a Malaysian bank soon.

SILV is pursuing seven contracts - two in Malaysia, one each in Thailand, Myanmar and Cambodia and two outside ASEAN.

In the medium term, we expect SILV to benefit from

(i) Regional acquisitions and expansions undertaken by its existing customers, and

(ii) Potential listing of its Chinese associate.

Our TP is pegged at 20x average FY14F-15F EPS
Global peers Oracle Financial Services & Temenos trade at 19.5x & 19.2x 12-month forward EPS respectively, despite their lower growth prospects than SILV.

Source/Extract/Excerpts/来源/转贴/摘录: DBSV-Research,
Publish date: 12/11/13

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