SYS_CY22 Result Review,(AKD Off the Analyst's Desk Apr 20, 2023)
Systems Limited (SYS) announced it 4QCY22 result yesterday, where it posted NPAT of PkR1.5bn (EPS: PkR5.2), a decrease of 18%YoY and 30%QoQ. This takes CY22 earnings to PkR6.6bn (EPS: PkR22.8), with the bottom-line posting a hefty growth of 51%YoY. The result for the quarter is below industry expectations due to low gross margins on the back of a one-off transaction from NdcTech.
- Revenue for the quarter has increased by 34%QoQ to reach PkR11.6bn, while up by 143%YoY. This increase is on the back of a sale of license by NdcTech amounting to US$15mn during the final quarter of the year. On an yearly basis, SYS has generated PkR31.8bn in Revenue during CY22, an increase of 108%YoY due to organic and inorganic growth, coupled with hefty PkR depreciation.
- Gross margins for the quarter have decreased to 19.6% compared to 31.2% in 3QCY22, as the one-off sale of the license has been recorded fully in the cost of sales, dragging down the company’s profitability. We expect gross margins to normalize going forward, albeit slightly lower than recent history due to expansions in new regions.
- Operating expenses for the company are in-line with expectations, with operating profit clocking in at PkR1.3bn for the quarter and PkR5.4bn for CY22, an increase of 55%YoY and 69%YoY respectively.
- Other Income for the quarter clocked in at PkR495, higher than expectations and likely due to strong return on ST investments in the absence of notable exchange gains. On an yearly basis, Other Income has increased by 1.4x to clock in at PkR2.2bn compared to 653mn in CY21, majorly on the back of the hefty PkR depreciation aforementioned.
- The company has announced a final dividend of PkR5.0/sh, taking payout ratio for year to 22%, a substantial decrease compared to a payout ratio of 33% in CY21 and 41% in CY20. This shift in strategy is likely due to aggressive expansions, both organic and inorganic.
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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