Silverlake

Silverlake: CS has an unrated report on the counter. The house notes that Silverlake Axis provides financial software and maintenance services to about 85 customers; including about 40% of the top 20 banks in South East Asia. For 1H FY14, software licensing formed 25% of revenue, while recurring maintenance formed 45%. SILV's current order book is at the lower end of its RM200-500mn guidance range. Management is hopeful of winning the potentially large RHB Bank software upgrade contract – which can almost double the company's order-book. The company estimates that almost half of South East Asian banks still use in-house/legacy systems. With increasing pressure on costs, SILV expects more to begin evaluating the use of third party systems (which may be cheaper to maintain long term). Management is positive on new project awards for 2014/15 and suggest mid-teens growth rates should be 'comfortable'. SILV estimates that almost half of its projects are awarded by existing customers, and that it hopes to execute RM200-300mn in projects each year. SILV intends to maintain dividend payout at 90%, and suggests it may use its RM330m in cash for buybacks.