Silverlake Axis

Silverlake Axis: UOB Kay Hian initaites Coverage on SilverLake with Buy Call and $0.91 TP. House note that Silverlake Axis dominance in the Southeast Asia (SEA) market will enable it to ride the positive trends in Asia Pacific’s banking sector. Its strong financials are backed by visible earnings, a recurrent revenue stream and superior margins. Healthy cash flows (FCF of 3.0-4.3 S c/ share) will support its dividend distributions and open up the potential for earnings-accretive M&As. Also note the possibility of a re-rating should its Chinese associate successfully complete its Shenzhen listing. An existing orderbook of about RM400m gives Silverlake earnings visibility until FY14. Maintenance & enhancement services revenue continues to build up as existing and new clients avail of necessary maintenance works and upgrades. House expect this segment to be resilient and to grow at a 27.8% CAGR over FY13-15.