Silverlake Axis

Silverlake Axis: 2QFY14 net profit rose 23% to RM60.6m, while topline was 24% higher at RM125.2m, mainly due to higher contribution from Software Licensing, and Maintenance and Enhancement services. New sources of revenue from Insurance Processing, and Sale of Software and Hardware products buoyed topline. A 6% increase in admin expenses to RM8.6m arose mainly from the consolidation of CVSB and Merimen Group, while finance costs spiked to$1.7m from a low base due to interest expense and quarterly fair value adjustment on remaining consideration of Merimen and CVSB. Share of associate, GIT InfoTech’s profit also skyrocked 2.6x to $4m, lifting bottomline. Management expects Asian financial sector to remain resilient in 2014. Nontheless, it guides ample business opportunities to pursue new software projects and software implementation contracts. Management also expects acquisitions to buff up its business enterprise software solutions businesses. Silverlake closed yesterday at ~20x annualized 2QFY14 P/E. NAV was 26.47 sen. Interim dividend of 0.9₵ proposed.