· After several organic expansions, Systems Limited now has offices in 16 countries. Clients with a revenue contribution of more than US$100k have increased to 191 vs. 129 in CY21, leading to a greater diversification amongst clientele. With clientele across several sectors, the company has strongly diversified its earnings, hedging itself from industry cycles.

· With 84% of revenue generation in foreign currencies (USD 79%, EUR 5%, PkR 16%), the company’s revenue increases when the local currency depreciates. Moreover, the company records exchange gains once trade debts in foreign currencies are revalued in PkR terms.

· In the year, the company has further strengthened its workforce by 15.5% to end CY22 with 6,147 employees. This continuous bench-building has enabled the company to drive towards hefty organic growth without any logistical constraints.

· Incorporating a target P/E multiple of 13x, we have a Dec’23 Target Price of PkR580.6/sh, an upside of 37.8% from last close which along with a dividend yield of 2.7%, culminates to a potential Total Return of 40.5%—warranting a “Buy” call.

Courtesy – AKD Research