UOBKayhian on 12 Nov 2014
FY14F PE (x): 26.8
FY15F PE (x): 22.4
Strong net profit growth of 16.7% yoy due to higher revenue contribution from software
licensing (+85% yoy), maintenance and enhancement (M&E) services (+22%). This
was partially offset by declining sales of software and hardware products (-78%), lower
software project services revenue (-43%), credit and cards processing (-5.1%) and
insurance processing (-4.1%).
Maintain BUY with a higher target price of S$1.70 (previously S$1.45). We use a 3-
stage DCF model with 8.25% cost of equity, 7% stage 2 growth (previously 5%) and
3.5% terminal growth. This increase reflects stronger mid-term growth as SILV’s
maintenance and enhancement segment continues to expand. We like the group’s
strong cash generation and high payout. The implied FY16F PE of 28.6x is above the
peer average of 16.9x. However, SILV’s FY16F ROE of 50.3% is superior compared
with its peer’s average of 23.0%.
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