18 September 2015
SINGAPORE:Silverlake Axis (SILV SP) Flash Note
Silverlake Axis (SILV SP SP)
HOLD Recommendation; Target Price S$0.66
Silverlake Axis Ltd Acquires SunGard Ambit (Singapore) Pte. Ltd. for US$12 million
Analyst(s): Andrew Chow, CFA/ Bennett Lee, CAIA: (65) 6590 6633 / 6590 6616
Whats New:
Silverlake Axis Ltd entered into a conditional Sale and Purchase Agreement with SunGard Asia Pacific Inc. to acquire the entire share capital of SunGard Ambit Pte. Ltd. ("SAS") for US$12m. This acquisition will be financed entirely with SILV's internal resources.
About SAS:
SAS and its subsidiaries ("SAS Group") are in the business of providing a range of banking software that enables banks to address their core banking, customer management, online banking, mobile banking and card management requirements in Asia Pacific, Middle East, South Asia and Eastern Europe.
Our view:
We think this acquisition brings a complementary retail banking portfolio of software and service solutions to SILV. In particular, the SAS Retail Banking Product Portfolio positions SILV for mid-tier customers while offering a broader variety of tiered deployment options from a technology and a pricing perspective. SAS's products can be deployed on open digital platforms thereby making it possible for Silverlake Axis to address the needs of customers from mid-tier to large enterprises. We view this positively as this expansion is likely to offset slower revenue growth from SILV's license and project services segments while banks and financial institutions continue to cut back on CAPEX spending.
We understand that the acquisition is expected to contribute approximately 15% to the revenue of the enlarged Silverlake Axis Group upon completion. In addition to cost synergies, we think that revenue synergies will also be created from the cross selling of software and services to each other's customers.
Maintain HOLD with a DCF based target price of S$0.66.
Regards,
Bennett Lee
UOB Kay Hian Research
DID: +65-6590 6616
Email: bennettlee@uobkayhian.com
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