On Feb 14, Silverlake Axis reported higher earnings of RM99.7 million for the half year ended Dec 31 2022, up 5% y-o-y. Revenue in the same period was up 9% y-o-y to RM392.3 million, with the proportion of recurring revenue, which gives better earnings visibility, at 71%, slightly lower from 75% accounted in 1HFY2022.
In 2QFY2023, Silverlake Axis won new contracts worth a total of RM145 million, up 6% over the preceding 1QFY2023.
“We continue to expect strong demand across all the various product streams, including the new MOBIUS system,” says DBS, referring to a relatively new product offering that Silverlake Axis is pushing.
DBS estimates the company to have RM1.8 billion worth of deals in the pipeline.
See also: Analysts more confident on DFI’s Retail prospects following recent inaugural investor day
“Despite the uncertain and volatile macro backdrop, financial institutions are generally still in a spending mode, upgrading and transferring their products and services to digital form,” says DBS.
The target price of 48 cents is pegged to 18x earnings.
Similarly, CGS-CIMB analyst Andrea Choong has kept her "buy" call and 44 cents target price.
"We think that strong yoy earnings growth across the banking sector could flow into stronger digitalisation/investment budgets, and catalyse SILV’s deal win momentum," writes Choong in her Feb 15 note.
As at 11.36am on Feb 15, Silverlake Axis traded at 36 cents, down 4.05%.
