- Pakistan recorded monthly IT exports of US$298mn, up 27% year over year and 4% Month over Month in August 2024. These monthly IT exports in August 2024 are higher than the last 12-month average of US$275mn.
- The YoY jump in IT exports is due to (1) IT export companies’ growing client base globally, especially in the GCC region, (2) the relaxation in the permissible retention limit by the State Bank of Pakistan, increasing it from 35% to 50% in the Exporters’ Specialized Foreign Currency Accounts, and (3) stability in PKR, which encourages IT exporters to bring a higher portion of profits back to Pakistan.
- MoM increase in IT exports is due to more working days in August (21) compared to July (20). Export proceeds per day were recorded at US$14.2mn for August vs. US$14.3mn in July.
- Pakistani IT companies are actively engaging with global clients. Leading IT companies in Pakistan recently attended London Tech Week 2024, Collision Canada 2024, and Black Hat, USA.
- According to a Pakistan Software Houses Association (P@SHA) survey, 62% of IT companies maintain specialized foreign currency accounts.
- A major development in July 24 was SBP adding a new category of Equity Investment Abroad (EIA), specifically for export-oriented IT companies. IT exporters can now acquire interest (shareholding) in entities abroad utilizing up to 50% proceeds from specialized foreign currency accounts. This development will further boost the confidence of IT exporters to remit proceeds back to Pakistan.
- Net IT Exports (Exports-Imports) reached a monthly total of US$257 million in August 2024, an increase of 26% year over Year. These net IT export numbers in August 2024 are also higher than the last 12-month average of US$241 million.
- We believe the IT sector will continue its growth trajectory and momentum, with likely growth of 10-15% for FY25 to US$3.5-3.7bn.
- Systems Limited (SYS) is our preferred pick within the IT sector. SYS trades at 2024E and 2025F PE of 12x and 9x, respectively.
- Courtesy – Topline Pakistan Research
