Silverlake Axis shares surged 8.93% to close at 31 cents on March 14 after the company announced an off-market purchase offer worth $80 million to buy back a portion of shares held by the minority owners of the company.
Silverlake Axis, which providers software and IT services for financial services firms, plans to offer 33 cents each for up to 242.4 million shares, representing some 9.06% of its total issued share base.
The company wants to signal that its share price, at current levels, is undervalued. By buying back those shares, the number of Silverlake Axis shares in circulation will be reduced and will then have the effect of increasing the earnings per share.
“The equal access offer will also provide shareholders with an opportunity to realise their investments in the shares at a premium over recent market prices of the shares without incurring transaction costs,” states the company in its pre-market announcement on March 14.
Group executive chairman Goh Peng Ooi, who holds some 68.58% of the company, will not take part in the offer. As such, the minority shareholders can accept the offer for some 28.84% of the shares they own.
Silverlake Axis has reported earnings of RM59.6 million for its 2QFY2021 ended Dec, up 72% y-o-y. Revenue in the same period was up 29% y-o-y to RM206.5 million, led by higher software licensing revenue.
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For 1HFY2021 ended Dec 2021, earnings was up 40% y-o-y to RM94.7 million, while revenue was up 16% y-o-y to RM358.5 million.
Thus far this FY2022, more than RM300 million worth of new contracts have been closed, “far exceeding” the same time for both FY2020 and FY2021.
