not vested
THIS STOCK’S SPECIAL DIVIDEND HAS BEEN DELAYED. SO WHY ARE ANALYSTS STILL KEEN ON IT?
By Gwyneth Yeo
SINGAPORE (Nov 14): RHB Research has maintained its “buy” rating on Silverlake Axis, even after the group’s special dividend from its sale of Global InfoTech (GIT) is expected to be delayed to 2QFY17.
RHB’s analyst Jarrick Seet noted that the group is expected to post a gain of RM267.7 million ($117.7 million) and receive proceeds of RM339.8 million from the sale of its allocated shares in GIT.
“We understand that the proceeds transfer is to take longer than expected due to the procedures involved, but expect this to be completed by 2HFY17,” writes Seet in a note on Monday.
To be sure, the group’s core businesses in software licensing and software project services have been seeing slower growth amid a challenging operating environment. Revenues from the two segments fell 27% and 59% respectively as banks were cutting costs.
However, Seet expects these segments to improve by 2HFY17 given the scheduled project for a bank in Thailand and some upgrading works.
On top of that, the group’s earnings are set to benefit from its maintenance and enhancement services segment for the full year to June, “as banks prefer to focus on smaller projects in this tough macro-environment and cost-cutting period”.
Furthermore, Seet believes the group may make some acquisitions in the near term, in line with its focus on growing its insurance business, which may translate into special dividends for shareholders.
That said, the brokerage has a target price of 77 cents for the group.
Shares in Silverlake Axis are trading 1 cent lower at 62 cents.
Source: The Edge
http://smr.theedgemarkets.com/article/s ... 4-87358173