EUR 9.10 For Business Accounts Only

SYS - Improved earnings owing to higher revenue and cost optimization, (AKD Off the Analyst's Desk Oct 27, 2023)

AKD, Off the Analyst's Desk SYS - Improved earnings owing to higher revenue and cost optimization SYS announced its 3QCY23 results wherein they posted a consolidated PAT of PkR1.9bn (EPS: PkR6.69/sh) vs. PkR1.4bn (EPS: PkR4.86/sh) in the 2QCY23 and PkR2.2bn (EPS: PkR7.72/sh) in SPLY. Cumulatively, in the 9MCY23, the company posted earnings of PkR24.57/sh vs. PkR18.47/sh in the SPLY, recording a 33.0%YoY growth. • The company managed to post a topline of PkR14.2bn during the outgoing quarter, up 13.3%/62.9% QoQ/YoY owing to continued penetration within the MEA and APAC region, in our view. • Gross and operating profitability increased by 11.2%/42.5% QoQ/YoY and 27.7%/26.9% QoQ/YoY, respectively owing to better cost management during the quarter, however gross margins remained under pressure at 27.3% (3QCY23) vs. 27.8% (2QCY23) and 31.2% (3QCY23), due to continuing inflationary pressures globally keeping costs on the higher side. • Finance cost declined slightly by 2%QoQ due to a reduction in short term borrowings compared to last quarter, however other income also declined sizeably by 37.4%QoQ which we believe is due to the absence of exchange gain even though short term investments rose from ~PkR0.4bn to ~PkR2.1bn since last quarter. • Operating margins improved slightly to 14.9% vs. 13.2% last quarter over ongoing cost rationalization efforts, however, margins are still lower compared to SPLY (19.1% in 3QCY22). • Company booked impairment losses of PkR383.1mn vs. PkR220.5mn in the previous quarter which we opine is owing to continued losses in the VC space. However, we feel these investments may turnaround once the global economic situation improves. AKD Research