SILVERBRIDGE

Financial Mail - Investors Monthly - - Opening Bell - IM’s

Share price: 300c JSE code:

HOLD SIX MONTHS AGO, WHEN THE SHARE price was about 160c, SilverBridge — which of­fers tech­nol­ogy so­lu­tions to fi­nan­cial ser­vices com­pa­nies — would have been “buy”. Since about April the share price surged more than 80% as the mar­ket cot­toned on to the com­pany’s value proposition and long-term growth at­tributes. The firm re­volves around a core ser­vice that has steady de­mand and can gen­er­ate re­as­sur­ing cash flows.

SilverBridge is hardly on a de­mand­ing rat­ing, with a trail­ing earn­ings mul­ti­ple of about 10 times. In the past fi­nan­cial year cash flows were strong at R15.5m, the mar­gin ro­bust at al­most 14% and there is cash of R27m in the bank (about 77c/share).

SilverBridge’s busi­ness model re­volves around back of­fice pol­icy ad­min­is­tra­tion in the life as­sur­ance in­dus­try, but it now also in­cludes group schemes and pen­sion funds, and med­i­cal and short-term in­sur­ance. Its in­creased busi­ness in Africa is also heart­en­ing.

Re­cent re­sults show it is steadily build­ing core an­nu­ity streams while the top line ticks over. What could make a huge dif­fer­ence in fu­ture is the in­tro­duc­tion of ad­di­tional higher value-added of­fer­ings in the sup­port area.

As the fi­nan­cial ser­vices in­dus­try adapts to the de­mands of a dig­i­tal world, so SilverBridge will be able to cap­i­talise on the on­go­ing thrusts to dif­fer­en­ti­ate prod­ucts and ser­vices.

Ex­ist­ing SilverBridge share­hold­ers should stay put. Prospec­tive in­vestors should pray for share price weak­ness.

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