Silverlake Axis's net profit grew by 33%

Silverlake Axis - 3Q14 Results – 1st take
By Colin Tan Silverlake Axis's net profit grew by 33% y-y to RM63m for the quarter, driven by growth in maintenance and enhancement services as well as sales of software and hardware products. The increased sales benefited from 2 large orders for hardware products delivered to customers. Maintenance and enhancement services continue to grow steadily with new project enhancement contracts secured in Singapore and Thailand. The increase in profit was also contributed by higher software licensing and new recurring revenue stream from insurance processing by Merimen Group (acquired in FY13), offset by a drop in project services due to fewer project implementation contracts in progress in 3Q14.

This brings its 9-month profit to RM175m, which formed 73% of our FY14F net profit. This is within expectations as its 9-month profits historically ranges from 69% - 72% of full year profit in the last 3 fiscal years. Superior net margin was maintained well above 40%, contributed by lower operating expenses.

Silverlake proposed an interim dividend of 1 Scents per share which is above expectations, bringing the total FY14 interim dividends to 2.7 Scents, 35% higher over the previous year. Forecast dividend yield is over 4%, based on last done share price at S$0.855. Further updates will be provided after the analyst briefing today.