Silverlake Axis (SILV SP/5CP.SI)
Updated 15 February 2021
- Silverlake reported 2Q FY21 results on 10th February with RM160mn sales, RM68.8mn EBITDA and RM32.9mn profit. On a semi-annual basis, sales are -13% YoY while PATMI is – 32% YoY.
- Silverlake saw quarterly improvements, but the business environment remains weak, with 1HFY21 results coming in at less than 50% of our full year estimates. While this was to be expected, profits came in at <40% of our full year estimate due to another quarter of high taxes.
- Maintain NEUTRAL with new TP of S$0.26. While the business environment is set to improve, we advocate staying on the sidelines until Mobius records a couple of major contract wins to get the ball rolling.
Forecasts
We maintain prior revenue forecasts at +3% YoY, increase admin expense estimates, tax estimates and finance cost estimates.
Our FY21F net profit margin estimate is now 22.7%, which excludes contributions from Other Income.
We also trim dividend payout ratio from 50% to 40% implying 0.8 Sct dividend per share, a 3.1% dividend yield based on Friday’s close price of S$0.26.
Valuation & Action
We maintain 13x PE rating on FY21F earnings, with a new Target Price of S$0.26. Our FY22F earnings forecast leads to a S$0.29 TP, implying upside for investors with a longer term horizon.
Maintain NEUTRAL rating.