Silverlake’s share price slips 8% on potential cancellation of mega-bank merger

The slip presents a good buying opportunity.

Silverlake Axis’ share price slipped 8.2% to $1.23 yesterday, as news of the potential cancellation of Malaysia’s mega-bank merger made the rounds.

Silverlake was expected to benefit from the merger of CIMB, RHB, and MBSB by executing integration projects for the enlarged entity. According to Maybank Kim Eng, the decline presents a buying opportunity as it was just a knee-jerk reaction.

“If this development materialises, the integration work for the combined banking entity that Silverlake is expected to do will be taken off the table. However, nothing is lost completely, in our view, as RHB may proceed with the much anticipated upgrade of its core banking system, which Silverlake had been in the running for. The only concern is Silverlake fails to secure the upgrade job which we think is mitigated by its established foothold in Malaysia. Assuming Silverlake wins this project, earnings contribution from RHB is merely delayed and not lost. We believe today’s share-price reaction is temporary and presents a good buying opportunity,” stated Maybank Kim Eng.