Silverlake Axis Ltd. – Value Analysis (SINGAPORE:5CP) : December 26, 2017

Capitalcube gives Silverlake Axis Ltd. a score of 75.

Our analysis is based on comparing Silverlake Axis Ltd. with the following peers – Centurion Corporation Limited, Datapulse Technology Limited, Plato Capital Limited and Sing Lee Software Group Ltd. (OU8-SG, BKW-SG, 5PI-SG and 8076-HK).

Investment Outlook

Silverlake Axis Ltd. has a fundamental score of 75 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Taking peer performance into consideration, relative performance over the last month and last year is around the peer median.
  • It currently trades at a Price/Book ratio of (4.53).
  • 5CP-SG‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • 5CP-SG has a successful operating model with relatively high net profit margins and asset turns.
  • Changes in annual earnings are in line with its chosen peers but lags in terms of revenue, implying the company is cost conscious and selective about spending for growth.
  • 5CP-SG‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high pre-tax margin suggests tight control on operating costs versus peers.
  • 5CP-SG‘s revenue growth in recent years and current P/E ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company’s level of capital investment suggests it might be under-investing in a business with above median returns.
  • 5CP-SG has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

5CP-SG has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 1.73% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 29.36%), and a well-cushioned interest coverage level of 92.73x, 5CP-SG can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • Of the 4 chosen peers for the company, only 3 of the stocks have an outstanding debt balance. Companies with no debt include BKW-SG.

5CP-SG has maintained its Quick & Able profile from the recent year-end.

  • 5CP-SG‘s interest coverage is its lowest relative to the last five years and compares to a high of 2,264.83x in 2015.
  • While its interest coverage decreased to 92.73x from 113.39x (in 2017), its peer median increased during this period to 11.85x from 10.64x.
  • Interest coverage fell 21.87 points relative to peers.
  • 5CP-SG‘s debt-EV has declined 0.59 percentage points from last year’s high but remains above its five-year average debt-EV of 0.99.
  • Though its debt-EV decreased to 1.73% from 2.32% (in 2017), its peer median remained relatively stable during this period at 29.36%.
  • Relative to peers, debt-EV fell 0.59 percentage points. Unlike the peer median, it is also below the 25% leverage benchmark.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Centurion Corporation Limited 68.84 0.8 3.44 8.47
Datapulse Technology Limited 0 6.68 No interest exp 999
Plato Capital Limited 36.96 0.4 -3.18 -15.98
Sing Lee Software Group Ltd. 29.36 3.26 11.85 22.43
Silverlake Axis Ltd 1.73 5.62 92.73 170.64
Peer Median 29.36 3.26 11.85 22.43
Best In Class 1.73 6.68 No interest exp 999

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Company Profile

Silverlake Axis Ltd. is an investment holding company, which engages in provision of digital economy software solutions and services to the banking, insurance, payment, retail and logistics industries. It operates through the following segments: Software Licensing, Rendering of Software Project Services, Maintenance & Enhancement Services, Sale of Software & Hardware Products, Credit Card Processing Services and Insurance Processing Services. The company was founded in 1989 and is headquartered in Petaling Jaya, Malaysia.


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