Keverus
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DBS Equity Research: Wired Daily 27 May 2015
Silverlake Axis - Too rich valuations, downgrade to FULLY VALUED with revised TP of S$1.08
We downgrade Silverlake Axis to FULLY VALUED with revised TP of S$1.08 (Prev S$1.35). The stock is trading at 18% premium to its global peers, which could disappear going forward in our view. Silverlake Axis is over-reliance on related party revenues. c. 24% of SILV's revenues in FY14 came from related party transactions, which is relatively high. Relatively high operating margins of c.55% versus 20-40% by large global peers, may be difficult to maintain in the long term. In a recent article, SILV was named among Asian companies that may have engaged in irregular financial reporting in the past. In a briefing held on 26th May, management rejected those allegations while the article has also been taken down.
Silverlake Axis - Too rich valuations, downgrade to FULLY VALUED with revised TP of S$1.08
We downgrade Silverlake Axis to FULLY VALUED with revised TP of S$1.08 (Prev S$1.35). The stock is trading at 18% premium to its global peers, which could disappear going forward in our view. Silverlake Axis is over-reliance on related party revenues. c. 24% of SILV's revenues in FY14 came from related party transactions, which is relatively high. Relatively high operating margins of c.55% versus 20-40% by large global peers, may be difficult to maintain in the long term. In a recent article, SILV was named among Asian companies that may have engaged in irregular financial reporting in the past. In a briefing held on 26th May, management rejected those allegations while the article has also been taken down.