- Silverlake Axis (SGX:5CP) posted 2QFY24 core net profit of RM40.4m (-17% q-o-q, -4% y-o-y), 9%/10% below our/Bloomberg consensus estimates. 1HFY6/24 core net profit formed 47%/49% of our/Bloomberg consensus FY24 forecasts.
2QFY24 missed our expectations as product mix evolves
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Robust RM1.4bn deal pipeline but gross profit margin may trend lower
- Silverlake Axis recorded ~RM114m worth of contract wins in 2QFY24; this brings its total contract wins to ~RM239m in 1HFY24 (FY23: RM635m). Silverlake Axis’s deal pipeline remained robust at ~RM1.4bn at end-Dec 2023 and the company said ~RM153m of this total had a high probability of closure in the coming quarters.
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- That said, we think its overall gross profit margin may start trending towards a new lower run rate (around the level of ~54% in 2QFY24 vs ~59% in FY23) as contract wins for its cloud-based core banking system (CBS) offering Mobius (revenue recognition of its cloud-based Mobius contracts is more spread out over the lifetime of the contract) start outpacing those of its traditional CBS Silverlake Axis Integrated Banking Solution (SIBS).
Optimistic of improving sentiment post regional elections
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