Systems Limited (SYS) announced its 3QCY22 result today where it posted NPAT of PkR2.15bn (EPS: PkR7.7), in line with our expectations and growing by 22%QoQ compared to earnings of PkR1.8bn (EPS: PkR6.3) in 2QCY22. Tremendous growth is witnessed on YoY basis, where the earnings have doubled (~113% growth) compared to 3QCY21. This brings cumulative earnings for 9MCY22 to PkR5.2bn (EPS: PkR18.5), up by 104%YoY.

·         Consolidated revenue for the quarter has increased by 42%QoQ to reach PkR8.7bn, mainly due to the consolidation of NdcTech after the completion of the acquisition. Other factors include growth in export revenue due to expansions into new regions along with hefty Rupee depreciation. Moreover, Revenue has grown exponentially when compared to a topline of PkR4.0bn in SPLY, up by 118%YoY. Total Revenue for 9MCY22 has clocked in at PkR20.1bn, growing by 91%YoY.

·         The company has experienced a drop in gross margins, clocking in at 31.2% against 33.5% in 2QCY22. The lower margins are on the back of increased revenue from new regions Systems has expanded into, with these entries being a cost center in the initial periods. Furthermore, the consolidation of NdcTech has likely pushed down gross margins.

·         Systems has recorded Other Income of PkR754mn due to substantial exchange gain on the trade debts held by the company in foreign currencies. To recall, the Rupee has depreciated by 14.4% in 3QCY22.

·         On an unconsolidated basis, the company has posted a revenue of PkR6.0bn and earnings of PkR2.0bn (EPS: 7.2).

 Courtesy – AKD Research