Silverlake Axis

Silverlake Axis: Religare Capital initiates with a Buy and $0.51 TP, implying 46% upside. House TP based on a SOTP model valuing SILV’s recurring income stream at 24x P/E and its project-based income stream at 5x. On an aggregate basis this equates to a 2012E blended P/E of 15.6x for SILV SP. A key catalyst to watch for this year will be the potential listing of grp’s China subsidiary GIT. House add that Silverlake benefits from lucrative project-based software license sales, upgrades, and customizations and successfully competes with global players such as Infosys and Oracle thanks to its 20-yr track record and well entrenched ASEAN knowledge. Silverlake has never lost a core banking software customer in its history. According to IDC Financial Insights, 28% of Asian banks’ strategic spending will go towards core banking systems such as Silverlake provides. Half of ASEAN banks still haven’t moved to third party core banking software, thus ASEAN provides a substantial opportunity for customer growth. Co has also begun expanding into China and Japan.