Could Silverlake Axis Be Singapore’s Software & Computer Services Value Share?

silverlake axis logoFour companies included in the FTSE ST All Share Index are classified as part of the Software & Computer Services sector.

The four companies are Silverlake Axis (SGX: 5CP), CSE Global (SGX: 544), OKH Global (SGX: S3N) and DMX Technologies Group (SGX: 5CH).

These companies are engaged in the provision of consulting services related to information technology; publishers and distributors of computer software for use by individuals and companies. The sector also includes companies providing internet-related services such as web hosting, domain-name registration and email services.

Silverlake Axis is the largest of the four with a market value of S$2.5b. It provides integrate back-end solutions to major financial institutions and organisations. These include banks, insurance companies, payments and retail industries.

But does the consistently-high profitability of the company achieved through “locking in” customers translate into a value investment. With an earnings multiple of almost 30 and a price-to-book ratio close to 15, it seems unlikely, even with a decent dividend yield of almost 3% on offer.

CSE Global and OKH Global continue the trend of offering little in terms of value. The former has an earnings multiple of around 170. It is priced at 2.5 times its book value. OKH Global is priced at close to five times its book value, despite making net losses in recent years.

DMX Technologies provides integrated network infrastructure and digital media software and solutions. It is priced at a considerably more reasonable earnings multiple of nine, which is below the market average of 14. It also has a price to book ratio of only 0.5. So, DMX Technologies could be of interest to value investors. However, we might need to look past the less-than-impressive dividend yield of only 1.6%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Adam Kuo doesn’t own shares in any companies mentioned.