SINGAPORE (June 5): CIMB is maintaining its “add” on Silverlake Axis with 65 cents target price given the launch of a new product and increasing prospect of new order wins.
In a Friday note, CIMB analyst William Tng says Silverlake’s insurance processing subsidiary Merimen has launched its newest offering, TrueSight Analytics.
TrueSight provides insurers with comparative analysis of parts pricing, labour pricing and turnaround time among vendors and service providers. The data can be used to benchmark, measure and improve claims indicators.
Already, TrueSight Analytics has won its first customer in Indonesia. Now, Merimen hopes to win more customers in the region.
Meantime, Tng says the prospect of new order wins is increasing given key banking customers seem to have seen the worst from the impact of the oil & gas downturn.
To recap, software Licensing Revenue (SLR) has been on the decline since 4Q16 and 2Q17 and 3Q17 SLR were the lowest since 1Q13.
Software Project Services Revenue (SPSR) actually hit a record of RM36.1 million ($11.7 million) in 2Q16 but has been on the decline since then.
As for Silverlake acquiring the shareholdings of executive chairman Goh Peng Ooi in various private entities, Tng says investors are likely to react positively if this acquisition is financed via the issuance of new Silverlake shares.
Silverlake has already submitted a non-binding letter to Goh indicating its interest in further exploring this potential opportunity.
Tng has also doubled its FY17 core EPS forecast after obtaining a better understanding of Silverlake’s one-off items in its 9M17 results and the relevant tax adjustments. This came after 3Q17 core net profit was adjusted to RM40 million from a loss of RM7 million previously after taxation changes.
Shares of Silverlake are trading flat at 53.5 cents.
