Glenn Thum, an analyst from Phillip Securities, maintained the Buy rating on Silverlake Axis (SLVFF – Research Report). The associated price target is S$0.36.
Geoff Thum has given his Buy rating due to a combination of factors pertaining to Silverlake Axis’s financial performance and market position. Notably, the company’s second-quarter fiscal year 2024 earnings were in line with expectations, meeting nearly half of the full-year estimates. Despite a slight year-over-year decline in earnings attributed to lower non-recurring revenue and increased operational expenses, there was an observed strength in recurring revenue streams. Silverlake’s recurring revenue, which includes maintenance and enhancement services, insurance ecosystem transactions, and retail transaction processing, showed a 4% year-over-year growth. This resilience in the face of softer non-recurring revenue and the company’s sizeable order book, valued at RM790 million, underscore the analyst’s positive outlook.
Furthermore, Thum’s confidence in issuing a Buy rating is underpinned by the company’s improving quality of earnings and potential for growth. Silverlake’s earnings quality is on an upward trajectory due to an expanding maintenance revenue from the core SIBS software and the introduction of new products such as MOBIUS and Symmetri. Additionally, the company is expected to benefit from a recovery in banking IT expenditure following cautious spending during the pandemic years. The potential deal with a Thailand bank and the growth in bank IT spending are seen as key drivers for the company’s future expansion. These factors, combined with a valuation pegged to 19 times the projected earnings for FY24, justify Thum’s Buy rating and a lowered yet optimistic target price of S$0.36.
In another report released on February 16, CGS-CIMB also reiterated a Buy rating on the stock with a S$0.36 price target.
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Silverlake Axis (SLVFF) Company Description:
Silverlake Axis is a Singapore-based provider of software solutions for the banking, insurance, government, retail, and logistics industries. The firm’s operations are organized in six segments: software licensing, software project services, maintenance and enhancement services, sale of software and hardware, credit card processing services, and insurance processing services. The firm has operations in Southeast Asia, Northeast Asia, South Asia, the Middle East, North America, Africa, and Europe.
