New contract win; more to come. SLA bagged a contract from its existing customer Hong Leong Bank to add on the enterprise payment platform. We estimate the contract to be worth in excess of MYR20m, strengthening the group's project backlog orders to MYR420m. According to IDC, a recent survey shows that a large number of banks from the ASEAN countries are likely to upgrade their core banking systems in order to stay competitive. As such, we expect the group to announce more contract wins in the near future, coming potentially from the markets of Thailand and the Philippines.

M&A to drive growth. SLA entered into an agreement to acquire 80% of Merimen Ventures (MV), a company providing software as a service (SaaS) to the insurance industry, for a cash consideration of MYD52.4m. The offer price came in at 7.6x FY12 P/E which is attractive for a software company. MV generated MYR8.6m profits in the year ending June 2012. We expect the new business to not only bring in additional profits but also to create synergies with SLA's existing products in targeting the insurance industry.

Placement of treasury shares. SLA placed out 45m of its treasury shares to institutional investors for a total consideration of SGD24.3m (SGD0.54/share). We opine positively towards the move, as most of these share were acquired from the open market at a depressed pricing range of SGD0.09-SGD0.12/share during the 2008 financial crisis. As the M&A warchest is refilled, we expect the group to make more earnings-accretive acquisitions.

Source: OSK