Meanwhile, Silverlake’s Merimen insurance platform is Asia’s top insurance software-as-a-service (SaaS) company and is ranked among the global top 10 in terms of claims processing and management solutions.
The group’s orderbook has seen a significant increase to about RM350 million currently, compared to less than RM50 million secured in FY17. It still has potential for more orders.
In a Thursday report, analyst Lee Keng Ling says, “Silverlake can leverage on its market leader position to secure more contracts as financial institutions upgrade/enhance their systems to avoid being rendered obsolete by the rising Fintech trend.”
Previously, the peak of contract wins could reach up to RM600 million a year, with an upcycle usually lasting up to six years and a downcycle about two years.
Based on the contracts secured, Ling believes that the group is at the beginning of an upcycle now.
In addition, high recurring revenue – mainly from software maintenance and enhancement services, as well as insurance processing – accounts for a substantial 60% of the group’s total revenue for the past few years.
Over the FY10-FY18 period, the group’s gross margins were also relatively high at about 60%.
“We expect this trend to continue, supported by the growing higher-margin software licensing business,” says Ling.
As at 11.30am, shares in Silverlake Axis are trading at 42 cents or 6.2 times FY19 book with a dividend yield of 4.9%.
