UOBKayhain on 13 Feb 2015
FY15F PE (x): 26.9
FY16F PE (x): 23.4
Strong net profit growth of 18% yoy was registered by Silverlake Axis (SILV) due to
higher revenue contribution from software licensing (+26% yoy), maintenance and
enhancement (M&E) services (+21%). This was partially offset by declining sales of
software and hardware products (-78%), lower software project services revenue (-
36%), credit and cards processing (-10%) and insurance processing (-2%).
Maintain BUY with a DCF based target price of S$1.66. We used a 3-stage DCF model
with 8.25% cost of equity, 7% stage two growth and 3.5% terminal growth to arrive at
our valuation. We like the group’s strong cash generation and high payout. A dividend
yield of 3.4-4.6% in FY15-FY17 seems decent.
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