Karachi, May 11, 2023 (PPI-OT): System - Can’t buy Dollars Buy Systems
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.