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  • REITERATE BUY Entry – 0.30 Target – 0.36 Stop Loss – 0.27
  • Silverlake Axis is a software company that provides banking solutions to banks in Asia. The company has been operating for more than 30 years. Of the top 20 largest banks in Southeast Asia, 40% of them use Silverlake’s core banking solutions. 
  • Parent’s new partner. Earlier in July 2021, The Edge reported that private equity firm Ikhlas Capital is investing US$40mn in Silverlake Group, the holding company of the SGX-listed Silverlake Axis Ltd. Silverlake Group is the largest shareholder of Silverlake Axis. In turn, Ikhlas Capital is partly owned by former banker Datuk Seri Nazir Razak, and the firm is one of the partners of a conglomerate comprising other firms including AirAsia’s Group e-wallet unit Big Pay and Malaysian Industrial Development Finance (MIDF) vying for one of the five digital banking licenses to be awarded by the first quarter of 2022. 
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  • Digital banking is its future. Given Silverlake Axis’s experience and expertise in providing banking solutions over the past 30 years, combined with the recent news of the investment by Ikhlas Capital into its parent company, we think that the award of one of the five digital banking licenses could provide a much-need catalyst to Silverlake’s share price. Despite the >30% rally of its share price from the recent low, it is still near its 8-year low, partly due to a business slowdown over the years, and also due to a damaging short-seller report in 2015 which caused its market cap to almost halve in value. 
  • Still overlooked by consensus. Street expectations are not very high for the group, and may imply that many of the positive catalysts are not factored in yet into its current share price. There are 2 BUYS and 2 HOLDS and a 12m TP of S$0.38. Its valuations of 15x and 14x FY2022/23 P/E are relatively lower vs its software-related peers. 
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