Silverlake Axis *Official* (SGX: 5CP)

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.
 

Obama486

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no smoke without fire.................

I would avoid this stock as there are plenty of other mid caps that are solid and are selling cheap

http://www.bloomberg.com/quote/SILV:SP

Current P/E Ratio (ttm) 25.1873
Estimated P/E(06/2015) 24.8587

Relative P/E vs. FSSTI 1.6473
Earnings Per Share (MYR) (ttm) 0.1256
Est. EPS (MYR) (06/2015) 0.1270
Est. PEG Ratio -
Market Cap (M SGD) 2,618.81
Shares Outstanding (M) 2,247.91
30 Day Average Volume 2,989,310
Price/Book (mrq) 11.6573
Price/Sale (ttm) 13.6260
Dividend Indicated Gross Yield 3.61%


their PE ratio is just way tooo high............a sign of being overvalued... even for a tech stock

the support would be its 3.6% yield which seems attractive
 

Perisher

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Will buy in more below $1.10. Buy in small at below $1.20.
Overall, unless their accounting really is messed up, this company is actually making $$.
Has a high client retention rate which acts as it's moat and will be good to hold during crisis as it won't be affected much.
 

Keverus

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Will buy in more below $1.10. Buy in small at below $1.20.
Overall, unless their accounting really is messed up, this company is actually making $$.
Has a high client retention rate which acts as it's moat and will be good to hold during crisis as it won't be affected much.

So will you buy on Tuesday?

current price is $1.165
 

Obama486

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Too rich valuations

  SILV rejects allegations made in a recent article

  Trading at 18% premium to its global peers, which

could disappear going forward in our view

  Downgrade to FULLY VALUED with revised TP of

S$1.08

SILV rejects allegations on irregular reporting. 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.

Clarification on related party sales and markedly

superior margins. In FY14, contributions from related party

transactions were relatively high, with c. 24% of revenues

coming from such transactions
. Furthermore, an estimated

48% of the sales growth over FY11-14 or ~RM300m in total

came from related party transactions
over the same period.

SILV has stated that it has strong scrutiny and reporting

standards in place for related party transactions. In addition,

SILV is able to earn high operating margins of c.55% versus

20-40% by large global peers
(please see chart on page 3)

while spending less than 1% of revenues on R& D versus

Temenos&rsquo 9%.
SILV claims that more innovative but riskier

projects are performed by related parties, thus lowering R& D

expenses at SILV.

Downgrade on valuation grounds. SILV is trading at an

18% premium to its peer&rsquo s average of 18x, which could

disappear going forward.
We downgrade SILV to Fully

Valued with a lower TP of S$1.08 based on 18x FY16x PE
 

Obama486

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140akrb.png
 

Obama486

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for those who are trying to average down... dun say I never warn u...
1) PE very high
2) DBS already put big sell call
3) funds are throwing it quick and fast

I not vested... and have no intention to buy nor short
so my view is no biased

good luck to those who has the shares
if I was vested, I will throw asap... better safe than sorry

you have been warned... later lose money dun come here or edmw to cry mother cry father haha

cheers
 

Obama486

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Dunno leh. What u think? :)

u seriously wanna buy?

I suggest u all go download the full DBS report ba...

of all the 5 companies doing the same thing worldwide.. average PE is only 17..

yet SL is trading at close to 20% premium...

base on valuations alone.. it should drop 20% riao... add in the accounting allegations (I not saying their accounts real or fake) will create fear.... SL might be sold down to 15 times earnings within the next few months

just my view... but if u wanna buy up to u, its your own $$ anyway hahahaha
 
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