Silverlake Axis, a Good Swing Investment
Silverlake Axis is Malaysian fintech solution provider with clients in Europe, Middle East and Asia. Their main consumer is banks with 40% of the 20 largest banks in South East Asia using Silverlake Axis Integrated Banking Solution (SIBS). This includes banks like Maybank, UOB, OCBC and CIMB.
That said, it should be noted that their buisnes expands further into insurance and retail with products like Silverlake Axis Insurance Solution (MERIMEN) and Silverlake Axis Retain Merchandising System (PROFIT).
Unfortunately, during the pandemic, banks (who are typically risk adversed) began cutting down on expenses to hoard up on cash. This resulted in less projects being issued to Silverlake Axis further resulting in lower profits.
In 2019, their net profit was 245 Million RM, this dropped to 185 Million in 2020 and then 141 Million in 2021.
So why buy now?
With a recovering economy and better rates, banks have been making huge profits. DBS for example announced record breaking profits of S$6.8 billion with other banks like OCBC projected to do the same. This would result in more projects being issued.
In fact, according to the most recent Q2 reports, Silverlake Axis profits has increased by 72% mostly thanks to a 110% increase in project-related revenue. In response, share price has increased by 12.7% from S$0.275 to S$0.31, and will probably increase further.
DBS target price for Silverlake Axis before Q2 results were announced was S$0.38, so its not farfetch to expect much more out of this stock.
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