Silverlake Axis’ net profit leaps by 15% to RM68.6m

A weak ringgit equals a strong Silverlake Axis.

The digital services company got the push it needed this quarter, as its maintenance segment surged by 23%, while it also enjoyed an unrealised forex gain of RM13.5m.

The forex bonus was a result of the ringgit weakness against the SGD and the USD, according to a report by UOB Kay Hian.

From a low base, UOB Kay Hian said, its software project services posted a growth of more than double.

Meanwhile, the only downside of Silverlake Axis’ quarter was a decline in software licensing. Even this shouldn’t hurt the company much, as it only accounts for less than 20% of the group’s revenue.

On the other hand, the group registered lower margin due to a different revenue mix.

“The group's gross margin declined 4.5ppt to 60% as a result of a shift in revenue mix towards maintenance, which carries a lower gross margin (of about 60%) compared with licensing (90% gross margin),” UOB Kay Hian said.

The group is also in a net cash position of RM383m, as cashflow from operations remain strong.

“The group spent S$23.5m in 1QFY16 on the purchase of treasury shares and reiterated that they have the capacity to continue with share buy-backs when they see value. The shares purchased (18.8m treasury shares) will be either used for its employee performance share plan or cancelled,” UOB Kay Hian added.