Silverlake Axis

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Btw, what do you expect them to say? Let's say someone accused you of bad behaviors, how do you best defend yourselves?
Showing your track records? (Showing how much dividend you return to shareholders?). Just curious. This is not my core holding. Used to be one of my cores.
<re-vested>
My views are your Gilbert & Sullivan's:
"The flowers that bloom in the spring, have nothing to do with the case".
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Silverlake says accounts in order

KUALA LUMPUR: Malaysian billionaire Goh Peng Ooi said the board of Silverlake Axis Ltd has deliberated over the issues raised in an anonymous blog and found no issue with the tech company’s accounts.

He said Silverlake has engaged the Singapore Stock Exchange (SGX) to explain its side of the story and will hire a third-party consultant to go through the data again.

“Everything is in order. The company has been growing since the assets were injected,” he told StarBiz yesterday. Goh, with a 67% stake in Silverlake, is the founder and group executive chairman of the company.

Silverlake shares, listed on SGX, tumbled 24% on Friday to 63.5 cents after a 42-page report entitled “The Unbelievable Financial Alchemy of Silverlake Axis” and authored by “razor99” was released on Thursday night. Silverlake’s stock has been voluntarily suspended from trading as of yesterday.

The report placed a 29-cent target on Silverlake shares, as it alleges that Goh operated a large group of companies, collectively known as the Silverlake group, which encompassed a complex web of murky, private companies connected to the listed entity.

It said the listed company engaged in extensive related-party transactions with Goh through these private companies, while disclosure of these transactions lacked clarity.


The report added that there were numerous red flags and ample evidence suggesting that Goh has used these related-party transactions to inflate Silverlake’s reported results.

It said the listed company also has loss-making related parties, which employ a large number of Silverlake group employees.

“These hidden entities are undisclosed contingent liabilities to the listed company.”

The report said there were large related-party Silverlake-group private companies that were loss-making with negative shareholder equity.


These companies only continue to operate with an explicit guarantee of financial support from Goh.

The report noted that these entities were known to have ongoing related-party transactions with the listed company and they have a combined cost base almost as large as the listed company, with almost as many employees.

The report noted that these entities were being used to flatter the listed company’s profitability, whereas in reality, they were contingent liabilities that should be disclosed in the annual report.

Goh disputed the allegations and said the structure of Silverlake group was complex, owing to the nature of its business and the history of the company.

He said rules and regulations were followed and that the group has made proper disclosure in the corporate exercises it undertakes.

He said that as a MSC-status company, Silverlake had to ensure that its accounts were proper and in order.

Failure to do so would have meant a big penalty being levied on the company, as it benefits from tax breaks as a MSC-status company.


“If you want the tax exemption, you must have good accounting,” he said.

Silverlake released its full-year financial results on Monday.

In its latest financial year ended June 30, 2015, Silverlake posted a net profit of RM282.7mil.

Goh pointed out that for the year, Silverlake recorded an operating cashflow of RM305.5mil, out of which it paid RM285.8mil as dividends.

He said if Silverlake had posted just a paper or inflated profit, the company would not be able to pay out such a quantum of dividends in cash.

“We dividend out most of our profits,” he said.

Goh said he took the criticism in his stride, as the lines of responsibility were clear within the company.

He said the board of directors had control over the running of the company and his passion and interest were skewed towards research.

“My character is more academic and I don’t care what others think about me. But I do take people’s criticism as an education process,” he said.

“It’s my responsibility as a supplier and majority shareholder to develop software. The listing side of the business is left to the board.”

Penang-born Goh, 61, made it to the Forbes Malaysia rich list at number nine this year, with an estimated net worth of US$1.6bil (RM6.7bil). Although listed on the Main Board of the SGX, Silverlake is headquartered in Petaling Jaya.

http://www.thestar.com.my/Business/Busin...?style=biz
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The most pessimistic analyst report among those I have accessed, with TP 48 cents

Silverlake Axis kept at 'fully valued' by DBS with 48 cents target price

SINGAPORE (Aug 28): DBS Group Research says it is ceasing coverage of Silverlake Axis ( Financial Dashboard) after publishing this Friday research note.

DBS says Silverlake Axis posted disappointing 4Q15 which reflects challenging outlook for the company.

Singapore banks get 22% of their pre-tax profits coming from Greater China region where economic prospects are uncertain.

Meanwhile, sharp weakness in Malaysian Ringgit and Indonesian Rupiah have compounded the worries of Malaysian and Indonesian banks struggling with weak economic growth.

“We model Silverlake Axis to secure RM150 million ($6 million) of new orders for licensing and customised software in FY16F (about RM140 million in FY15) but we expect gross margins to decline leading to flattish earnings in FY16F,” says analyst Sachin Mittal.
...
http://www.theedgemarkets.com/sg/article...rget-price
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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(28-08-2015, 03:25 PM)CityFarmer Wrote: The most pessimistic analyst report among those I have accessed, with TP 48 cents

Silverlake Axis kept at 'fully valued' by DBS with 48 cents target price

SINGAPORE (Aug 28): DBS Group Research says it is ceasing coverage of Silverlake Axis ( Financial Dashboard) after publishing this Friday research note.

DBS says Silverlake Axis posted disappointing 4Q15 which reflects challenging outlook for the company.

Singapore banks get 22% of their pre-tax profits coming from Greater China region where economic prospects are uncertain.

Meanwhile, sharp weakness in Malaysian Ringgit and Indonesian Rupiah have compounded the worries of Malaysian and Indonesian banks struggling with weak economic growth.

“We model Silverlake Axis to secure RM150 million ($6 million) of new orders for licensing and customised software in FY16F (about RM140 million in FY15) but we expect gross margins to decline leading to flattish earnings in FY16F,” says analyst Sachin Mittal.
...
http://www.theedgemarkets.com/sg/article...rget-price
Quite interestingly, the banks which use silverlake as a vendor had given higher TP (though all revised downwards).

Just an observation, interpretation up to individual.

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It always fascinates me how the researchers turn table(the TP) that fast. Lolx.
Having said that, Silverlake may still turn out to be nuts (many things can happen than will happen).
But meanwhile, just saw this from Valuewalk (supposedly quite old, dated Feb), Pat Dorsey:
http://www.valuewalk.com/2015/02/pat-dor...mic-moats/

Silverlake was mentioned, it may not mean much or at all, but heck, just enjoy his view on three-standard deviation manager.

<revested twice on those 2 desperate days>
My views are your Gilbert & Sullivan's:
"The flowers that bloom in the spring, have nothing to do with the case".
Reply
(30-08-2015, 06:41 AM)ksir Wrote: It always fascinates me how the researchers turn table(the TP) that fast. Lolx.
Having said that, Silverlake may still turn out to be nuts (many things can happen than will happen).
But meanwhile, just saw this from Valuewalk (supposedly quite old, dated Feb), Pat Dorsey:
http://www.valuewalk.com/2015/02/pat-dor...mic-moats/

Silverlake was mentioned, it may not mean much or at all, but heck, just enjoy his view on three-standard deviation manager.

<revested twice on those 2 desperate days>

Interesting article. Thank.
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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(30-08-2015, 06:41 AM)ksir Wrote: It always fascinates me how the researchers turn table(the TP) that fast. Lolx.
Having said that, Silverlake may still turn out to be nuts (many things can happen than will happen).
But meanwhile, just saw this from Valuewalk (supposedly quite old, dated Feb), Pat Dorsey:
http://www.valuewalk.com/2015/02/pat-dor...mic-moats/

Silverlake was mentioned, it may not mean much or at all, but heck, just enjoy his view on three-standard deviation manager.

<revested twice on those 2 desperate days>

I read the Pat Dorsey report quite sometime back, meaning the report is quite dated. Long before all these accounting issues was raise. If you don't dig right in, SAL is indeed a very good stock. All the numbers point to its attractiveness of the business model/moat. I wonder would PD still holds the same view now after the short seller report.
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I would expect that he does. From a big name investor as Pat Dorsey we may expect that he scrutinized at least a few years back of annual reports. He has seen the holding structure, affiliate companies, RPT's and apparently he got comfortable with those because he bought the share.

It would be more interesting to hear how he got comfortable with the issues mentioned in the short reports.
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(01-09-2015, 12:15 PM)jaco Wrote: I would expect that he does. From a big name investor as Pat Dorsey we may expect that he scrutinized at least a few years back of annual reports. He has seen the holding structure, affiliate companies, RPT's and apparently he got comfortable with those because he bought the share.

It would be more interesting to hear how he got comfortable with the issues mentioned in the short reports.

this is risky line of thinking/investment thesis. When satyam blows up, Aberdeen was caught off guard with huge positions. Aberdeen is very credible fund mgr and you would assume they don't leave stones un-turn. It just goes to show its very difficult to detect fraud. Here I am not saying SAL is fraud but to emphasise the pt that even professionals can be caught. There are many other examples like Enron, WorldCom etc.
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I agree, but it is relatively easy to detect red flags pointing to possible fraud. Excessive RPT's and overly complex holding structures are red flags reminding us of some historical fraud cases.

Given the presence of these red flags, establishing that there is currently not any proof of fraud is not sufficient anymore. A prudent investor would invert this and require some proof that fraud is absent. A sensible explanation for the RPT's and holding structure would already be a good start.

I refuse to believe that an investor like Pat Dorsey missed these red flags or ignored them. As a professional investor he has the resources to investigate them further before investing millions. If you google his name, he has been going around talking about the wide moat qualities of Silverlake Axis. It would be good to also get his perspective on the accounting issues that came up.
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