EUR 9.10 For Business Accounts Only

SYS & FATIMA 2QCY23 Result Previews, (AKD Daily Ag 28, 2023)

AKD Daily

 

SYS & FATIMA 2QCY23 Result Previews

 

SYS—2QCY23 earnings expected to clock in at PkR11.32/sh: We expect SYS to maintain its high earnings trajectory owing to strong growth within almost all geographies, mainly MEA which has recently overtaken revenues from the North American region to become the biggest contributor to total revenues. Exponential development in KSA and overall new deals signed with banks in the MEA region are expected to boost revenues through the BFS vertical. Although we still believe that the European and North American markets’ contribution will remain slower as we saw in 1QCY23 due to economic difficulties, we expect the company to continue to benefit from high IT demand and a possible roll out of SAP vertical across all geographies. The company is poised to earn significant, albeit lower “other income” compared to last quarter, due to exchange rate depreciation (estimate: PkR1,676mn). Finance cost is estimated at PkR348mn vs. PkR157mn last quarter owing to an increase in overall borrowings and high interest rates generally. Effective tax rate is projected to come in at 18.4%, significantly higher than 2.8% last quarter due to the impact of higher super tax and a retrospective impact on FY23 earnings. However, the company benefits from a lower tax rate overall since more than 80% of revenues come from exports.

 

FATIMA—2QCY23 earnings expected to clock in at PkR2.19/sh: We expect FATIMA to post an EPS of PkR2.19/sh against PkR2.06/sh in 1QCY23 and profit of PkR0.08/sh in 2QCY22. Revenue is projected to clock in at PkR52.8bn (↑57.5%/59.1% QoQ/YoY owing to higher prices and sales from Fatimafert during the year, due to provision of RLNG. Gross margins may remain under pressure (estimate: 35.0% vs. 42.2% last quarter) due to exchange rate volatility translating to a higher cost of imports and a higher gas cost. Finance cost is expected to remain high due to high interest rates. Effective tax rate is estimated at 56.6% vs. 41.0% due to the impact of a higher super tax, plus a retrospective effect on FY23 earnings.

 

AKD Research