Systems Limited Posts Profit of Rs. 7.1 Billion in 9 Months of 2023

Systems Limited (PSX: SYS) posted a 40 percent year-on-year (YoY) profit growth during the 9-month period ended 30 September 2023.

According to the company’s consolidated financial results, the profit for the period increased from Rs. 5.1 billion to Rs. 7.1 billion. SYS did not announce any cash dividend for the period in review.

In 3QCY23, the company posted a consolidated PAT of Rs. 1.85 billion versus Rs. 2.15 billion in SPLY, down by 14 percent YoY.

SYS said in a brief commentary that consolidated revenue grew by 85 percent from Rs. 20.1 billion to Rs. 37.3 billion. Gross profit and operating profit increased by 59 percent and 35 percent, respectively.

During July-September CY23, the company managed to post a topline of Rs. 14.2 billion during the outgoing quarter, up 13.3  percent/62.9 percent QoQ/YoY owing to continued penetration within the MEA and APAC region, according to AKD Securities Limited.

In Q3, gross and operating profitability increased by 11.2 percent/42.5 percent QoQ/YoY and 27.7 percent/26.9 percent QoQ/YoY, respectively, owing to better cost management during the quarter, however, gross margins remained under pressure at 27.3 percent (3QCY23) vs. 27.8 percent (2QCY23) and 31.2 percent (3QCY23), due to continuing inflationary pressures globally keeping costs on the higher side.

Net profit for the period at Rs. 7.1 billion is 40 percent higher than SPLY, including the Rs. 2.6 billion exchange gain. Basic and diluted earnings per share both increased by 33 percent in line with profit for the period.

Eliminating the currency impact, revenue is up by 33 percent in US dollar terms.

Other income of the company jumped by 74 percent from Rs.1.7 billion to Rs. 3 billion in 9MCY23. Meanwhile, the finance costs of SYS increased by 326 percent to Rs. 653.8 million during the period in review.

In Q3, the finance cost declined slightly by 2 percent QoQ due to a reduction in short-term borrowings compared to last quarter, however, other income also declined sizeably by 37.4 percent QoQ which AKD said was due to the absence of exchange gain even though short-term investments rose from ~Rs. 400 million to ~Rs. 2.1 billion since last quarter.

Administrative expenses during 9MCY23 spiked by 68 percent from Rs. 1.7 billion to Rs. 2.9 billion. Additionally, the company paid Rs. 399 million in taxes, compared to Rs. 279 million in 9MCY22.

Basic and diluted earnings per share increased to Rs. 24.57 | Rs. 24.38 in 9MCY23 compared to Rs. 18.47 | Rs. 18.37 in SPLY.

At the time of filing, the company’s scrip at the bourse was Rs. 424.02, down 1.86 percent or Rs. 8.05 with a turnover of 382,929 shares on Friday.