Silverlake Axis

Silverlake Axis: Won 2 new software upgrading contracts from existing customers totaling approximately RM40m. One of the contract is the upgrading of the Singapore ops of a leading ASEAN bank, while the other is upgrading of the integrated provident fund system for Tabung Amanah Pekerja, Brunei’s social security organization. These are expected to contribute positively to Silverlake’s performance in the current and following financial years. Our back-of-envelope estimate is that the latest contract would bring delivery backlog to ~RM320m. Notwithstanding, Silverlake Axis’ nearest catalyst remains post-merger works for the OCBC-Wing Hang integration, while the impending CIMB-RHB-MBSB merger will likely bode well for Silverlake Axis. CIMB and MBSB are already existing customers, and the merger would likely bring RHB into their platform. Silverlake Axis is currently trading at 24.5x FY15e P/E. The street has 3 Buys, 2 Holds and 2 Sells on Silverlake Axis with a mean TP of $1.29