Pakistan Technology – Highest ever monthly exports of US$348mn in Dec-24; 1HFY25 exports up by 28% YoY
ISLAMABAD: Pakistan recorded highest every monthly IT exports of US$348mn, up by 15% YoY while also up by 12% MoM in Dec-2024. These monthly IT exports in Dec-2024 are higher than last 12-month average of US$299mn. This is the 15th consecutive month of YoY IT export growth, starting from October 2023.
This takes 1HFY25 IT exports to US$1.86bn, up by 28% YoY.
Export proceeds per day were recorded at US$16.6mn for Dec-24 vs. US$14.8mn in Nov-24.
YoY jump in IT exports is due to (1) IT export companies growing client base globally, especially in GCC region, (2) relaxation in the permissible retention limit by the State Bank of Pakistan, increasing it from 35% to 50% in the Exporters’ Specialized Foreign Currency Accounts, (3) allowance of equity investment abroad through these foreign currency accounts and (4) stability in PKR encouraging IT exporters to bring higher portion of profits back to Pakistan.
Pakistan Technology – Oct-24 IT Exports up by 39% YoY to US$330mn; 4MFY25 exports up by 35% YoY
Pakistani IT companies are active in engaging with global clients. Recently leading IT companies of Pakistan attended Oslo Innovation Week 2024, and Pak-US Tech Investment Conference.
According to a Pakistan Software Houses Association (P@SHA) survey, 62% of IT companies are maintaining specialized foreign currency accounts.
A major development in FY25 was SBP adding a new category of Equity Investment Abroad (EIA), specifically for export-oriented IT companies. IT exporters can now acquire interest (shareholding) in entities abroad utilizing up to 50% proceeds from specialized foreign currency accounts. This development will further boost confidence of IT exporters to remit proceeds back to Pakistan.
Net IT Exports (Exports-Imports) displayed monthly number of US$222mn and decreased by 16% YoY in Dec-2024. These net IT exports numbers in Dec-2024 are lower than last 12-month average of US$265mn.
We believe, IT sector will continue its growth trajectory and momentum with likely growth of 10-15% for FY25 to US$3.5-3.7bn. Under ‘Uraan Pakistan’ national economic plan government has set a target of US$10bn IT exports by FY29. This implies a target CAGR of 28% till FY29.
Within the IT sector, Systems Limited (SYS) is our preferred pick. SYS is currently trading at 2024E and 2025F PE of 15.3x and 11.4x, respectively.
