Brokers' take

Silverlake Axis | Buy Target price: S$0.62 Jan 7 close: S$0.41 DBS Equity Research, Jan 7

Silverlake secured eight digital innovation contracts from financial institutions during the first six months of FY2019 (July 18 to Dec 18); it also secured a software and services retail contract from AEON Vietnam. No further details of the contracts were disclosed but we estimate that digital innovation contracts are generally much smaller than core banking contracts, at about less than RM10 million (S$3.3 million) per contract, and takes less than a year to complete.

The contract sizes may be small but signify a new growing revenue stream for the group. Instead of relying mainly on core banking solutions contracts and maintenance & enhancement services contracts, Silverlake now has a third leg of growth. The digital innovation contracts are also less cyclical and lumpy, as compared to core banking contracts, thus providing a constant flow of contracts for the group.