Here’s why Silverlake Axis is bound for a turnaround in H2

Thanks to a brimming orderbook and raised licensing contribution.

Analysts are upbeat about Silverlake Axis’ 2H16, despite the company’s disappointing results in H1. Shaking off the last of one-off costs that mired profitability in H1, Silverlake is geared for a better H2 with a robust orderbook, increased licensing contribution, and a potential stake sale.

According to a report by RHB, stripping the company’s Symmetry Group acquisition, Silverlake has around MYR160m worth of orders remaining as of 2Q16. While most banks are slashing big capex spending, they are still burning cash on maintenance and enhancement services. Silverlake is also prowling for projects in Malaysia, and those involving Japanese banks that have bagged assets in Indonesia which are all in short-listing phases.

Also, while Silverlake’s licensing revenue tumbled 28% in 1H16, it was due to the fact that several projects that have more focus on licensing will be launched in 2H16. Management was optimistic that licensing revenue will rise at low single digits YoY for the full year, which means it is banking on licensing revenue growth in H2. With increased licensing revenue, profitability and gross margins are set to pick up in the latter half of FY16.

Additionally, Silverlake is sitting on a year-long moratorium that expires in May for a 20% stake in a China-listed associate. At current market prices, the stake is worth about $600m, or about half of Silverlake’s current market capitalisation. If a sale of the stake happens when the moratorium ends, RHB believes that Silverlake is likely to return the excess cash back to shareholders unless it sets out on a major acquisition.

Reaching the people who run Asia's businesses is harder than it used to be.

Inboxes are crowded. Attention is short. The executives you most want to reach — the founders, CFOs, and operators who actually move budgets — are the hardest to find through the usual channels. If you're building a company, a category, or a reputation, you already know this.

We've spent twenty years building the room they read. Singapore Business Review is where senior decision makers in Singapore and across Southeast Asia come for business coverage they can't get elsewhere — in print, online, and in person at the summits and roundtables we host across seven markets.

If you have something these readers should know about — a point of view worth publishing, a product worth their attention, an event worth their time — we'd like to hear what you're trying to do.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia