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.