Silverlake Axis

[momoeagle]

I initiated a small position in Silverlake on 10th Dec 2010 at a price of 0.33
It came to top volume today, so I thought I would start a thread on this.


The company describes itself on the website: "Silverlake Axis is a leading provider of end-to-end universal integrated banking solution. The Group's award winning Silverlake Axis Integrated Banking Solutions are implemented at over 75 customer sites in Asia including 40% of the Top 20 Largest Banks in South East Asia."

Basically, Silverlake is a Malaysian software solutions provider specialising in the financial industry. Silverlake develops the software for banks to interface and integrate their front-end retail-banking services with the back-end, known as “SIBS” or Silverlake Intergrated banking System. SIBS is a centralized software system for managing accounts and products such as deposits, payments and loans for banks. Specifically, SIBS provides solutions in areas such as deposits, loans, remittances
and payments, electronic banking, credit cards and trade finance. Silverlake Axis owns the intellectual property tights to SIBS.

Some of Silverlake's more famous clients include:
Hong Leong Bank, OCBC Bank, United Overseas Bank, Malayan Banking Bhd, Malaysia.



Silverlake's Barrier to Entry
Silverlake processes more than 50% of retail-banking transactions in South-East Asia. As mentioned earlier, Silverlake's software integrates the front-end and back-end of bank operations. From lending, deposits, credit cards, banking operations, Silverlake's software handles it. As the performance of such a software is critical to the smooth operation of banks, the reluctance and costs to switch are extremely high. As a result, it's customers will very likely stay loyal. Why risk a smooth banking operation on an untested new software when the current one is working very well?

From broker's writeup: It is of no coincidence that its clients are largely Southeast Asian Banks, including six of the nine anchor banks in Malaysia (EON Bank, Alliance Bank, Affin Bank, Hong Leong Bank, Malayan Banking and AMMB) and two Singapore Banks (OCBC and UOB). In Indonesia, it has six of the largest 10 banks, including Bank Mandiri, Bank Rakyat, Bank Tabungan Negara and Bank Niga.

In my opinion, with such client base at hand, any new bank wanting to set up shop in Singapore or Malaysia will consider Silverlake as a strong software logistics support for their banking operations. Coupled with loyal clients (based on logic, since I'm an engineer and I know how softwares tend to "stick" to companies for long), it would be tough for any newcomers into the market to snatch any clients.



Did a short write up on this 2 days ago. Many thanks to gm89 for helping me compile the excel spreadsheet which I posted up.
http://wealthbuch.blogspot.com/2010/12/s...art-1.html
http://wealthbuch.blogspot.com/2010/12/s...art-2.html


Any thoughts?

[Musicwhiz]

Thanks Momo, will start to read up on this company soon (no time arrrgh!).

If I am not wrong, yesterday the controlling shareholder announced that it may place out 50 million existing vendor shares to increase free float and trading liquidity of the shares. There will not be any additional monies raised from this exercise. So it seems the controlling shareholder is paring down his interest?

What are your thoughts on this?

[Blackjack]

A significant amount of 22 mio shares was transacted at 32cents before the market opened today, out of a total of 23 mio shares traded till now. That comes up to almost $7 mio worth.

Coincidentally, I also was looking at CMA and Silverlake for some time, but have not decided to get myself vested in either. I do like the stickiness as you've mentioned for the latter as well.

[momoeagle]

Thanks Momo, will start to read up on this company soon (no time arrrgh!).

If I am not wrong, yesterday the controlling shareholder announced that it may place out 50 million existing vendor shares to increase free float and trading liquidity of the shares. There will not be any additional monies raised from this exercise. So it seems the controlling shareholder is paring down his interest?

What are your thoughts on this?

I think it would be to the benefit to the controlling shareholder to increase the free float in order to generate the more interest in the counter. He had >80% ownership initially.

---

A significant amount of 22 mio shares was transacted at 32cents before the market opened today, out of a total of 23 mio shares traded till now. That comes up to almost $7 mio worth.

Coincidentally, I also was looking at CMA and Silverlake for some time, but have not decided to get myself vested in either. I do like the stickiness as you've mentioned for the latter as well.

I entered CMA ($1.86), Silverlake and First REIT ($0.665) just last last week to last week.

Silverlake is an interesting but very quiet company...

[SLC81]

If you invested in Silverlake Axis, you may remember the System Access Limited, which was bought over by Sungard in 2006 at very high price.

Prior to this, i noticed that System Access share kept going up from 11 cents to 30 Plus in the span of 2 months and i had plenty of time to buy in but i resisted because System Access financial numbers were not good (I was suspected they may not be able to continue as a "going concern" in a few years time), that proved to be a mistake, Silver Lake was bought over buy Sungard at 0.36 $, 03 times higher then i started noticed it so there must be something good at that company and you can't see it through reading financial figures or AR.

I was really puzzled at the way the share price going up, constantly and predictably for a long period of time so there must be some things people knew, sure enough, a year later, MAS fined some people for inside trading but i guess, this is just a drop in the ocean and MAS just do what is evidently known to them,

http://www.mas.gov.sg/news_room/press_re...r2007.html

Coincidently, Sungard was privatized by "Silverlake", a private equity firm at a premium offer.

For that reason, i think it pay to watch out for Silverlake Axis and we have to look further than just the number.

[Blackjack]

Is Silverlake and Silverlake Axis related in any way?

[Musicwhiz]

Hi Momo,

I think if the controlling shareholder were to run the business well, it would be noticed in time to come. Increasing the free float does not, in my opinion, make a company more attractive in itself.

Hi SLC81,

Could you elaborate on Silverlake and Silverlake Axis? Is there any connection between the two?

Also, you seem to assert that companies with share prices which move up without good reason may be guilty of something? Perhaps the case of System Access was a one-off incident rather than a rampant problem?

Hope you can clarify, thanks!

[momoeagle]

Hi MW,

it would still be hard if the major shareholder continues to hold >80% of the float, which was the case initially. I have a feeling public companies like to have a greater liquidity and trading of their equities on the market... it's like free advertisement.

[SLC81]

Hi SLC81,

Could you elaborate on Silverlake and Silverlake Axis? Is there any connection between the two?

Also, you seem to assert that companies with share prices which move up without good reason may be guilty of something? Perhaps the case of System Access was a one-off incident rather than a rampant problem?

Hope you can clarify, thanks!

Hi Musicwhiz, I could not find any things to suggest there are any connections between these two, do share if you find anythings.

There are always some reasons for share to go up but as outsiders and public investors we are always the ones come to know the last so it pays to watch out for any anomaly in movement and attempt to find these good reasons as it could turn out to be very profitable investment.

[Musicwhiz]

Interesting write-up on Silverlake in The Edge (see attached).

Can the company weather a protracted downturn which would adversely affect the banking sector?

(Not Vested)