SYS Posts Earnings Up 59%
Staff Report
KARACHI: Systems Limited (SYS) announced its 1Q2025 result wherein it posted a consolidated PAT of Rs2.5bn (EPS of Rs8.54) up by 59% YoY and by 23% QoQ. The result came higher than expectations due to higher-than-expected gross margins.
Alongside the result, SYS did not announce dividend which was in-line with expectations.
Earnings are up by 59% YoY in 1Q2025 due to higher net sales, better gross margins and higher other income.
Gross margins for 1Q2025 clocked in at 25.2% vs 24.4% in 4Q2024 and 23.7% in 1Q2024. To recall, In 4Q2024 there was higher one-off trading revenue which had lower margins and had impacted overall average margins.
On a QoQ basis, gross margins have improved in North America (31.1% vs. 30.3%), Pakistan (6.7% vs. -4.1%) and Asia Pacific (37.2% vs. 3.4%).
Revenue for 1Q2025 increased by 19% YoY and declined by 11% QoQ to Rs18.1bn. Growth has been achieved in all segments with Middle East, North America, Pakistan, Europe, and Asia Pacific increasing by 17%, 14%, 33%, 19%, and 24% YoY respectively. Revenue in 1Q2025 also increased by approximately ~19% in USD terms.HBL earnings
Other Income in 1Q2025 stood at Rs334mn against loss of Rs57mn in 1Q2024. Higher other income is due to exchange gain of Rs196mn against exchange loss of Rs169mn in 1Q2024.
Distribution costs have increased by 25% YoY to Rs624mn in 1Q2025. Higher costs are due to aggressive growth strategy in all markets.
Effective tax rate in 1Q2025 was 7.5% compared to 8.4% in 4Q2024 and 10.7% in 1Q2024.
Within the IT sector, Systems Limited (SYS) is our preferred pick. SYS is currently trading at 2025F and 2026F PE of 13.2x and 9.9x, respectively,” Topline said.
