Karachi, March 10, 2022 (PPI-OT): 4QCY21 EPS clocked in at PkR13.5

Systems Limited (SYS) announced result for CY21 where company posted consolidated PAT of PkR4.4bn (EPS: PkR31.7) up 79%YoY against PkR2.5bn (EPS: PkR17.8) for CY20. For 4QCY21, PAT stood at PkR1.9bn (EPS: PkR13.5), up 122/84% YoY/QoQ. Along with the result, company announced a dividend of PkR5/sh and a 100% bonus issue.

The result was significantly above our expectation due to a one-off gain of PkR816mn, recorded on dilution of control in subsidiary. Barring the one-off gain, result was in-line with our expectations.

Topline of the company grew by 70/20%YoY/QoQ to PkR4.8bn for 4QFY22, taking the total revenue for CY21 to PkR15.3bn, up 55% YoY. The growth largely came as the automation drive continues while company’s overseas business also prospers.

Company’s gross margin for 4QCY21 declined to 29% against 32/34% for 4QCY20/3QCY21 where we opine depressed margins of subsidiaries became a drag. For CY21, gross margins of the company stand at 33%, flat on YoY basis against 33% for CY20.

We maintain our Buy stance on the stock with a TP of PkR1,023/sh, providing upside of 62%. SYS has remained under pressure lately as market’s sentiment weakened on the back of escalation between Ukraine and Russia and de-rating of technology companies globally. However, recent levels provide a good entry point where projected PAT CAGR of 34% for CY20-23 is expected to drive the stock forward.