Silverlake

Silverlake: Stock price fell 8% to $1.23 in afternoon trading yesterday after news reported that the CIMB, RHB and MBSB merger could be called-off. Silverlake was expected to benefit from the merger by executing post-merger integration projects. The merger would have also secured RHB as a new customer. Maybank-KE thinks though even if the merger is called off, not all is lost, if RHB proceeds with the much anticipated upgrade of its core banking system, of which Silverlake had been in the running for. If Silverlake wins the RHB project, earnings contribution is merely delayed and not lost. Maybank-KE thinks that yesterday's knee-jerk reaction provides a good buying opportunity. Downside risk is if Silverlake does not win the contract, but this is mitigated by its establish foothold in Malaysia. Maybank-KE maintains Buy with TP $1.40