Equity Analysis /

Systems Ltd: 2QCY21 analyst briefing takeaways

  • SYS achieved c.50% yoy growth in revenues in 2QCY21, with geography mix largely unchanged

  • It hired c.500 new employees (mostly IT professionals) and added 43 new clients during 2Q

  • We have a Buy stance on the scrip with a Dec 2022 TP of PKR950/sh.

Intermarket Securities
31 August 2021

Financial Performance

  • SYS posted consolidated NPAT of PKR0.91bn in 2QCY21 (EPS: PKR6.61), up 69% yoy and 52% qoq, taking 1HCY21 NPAT to PKR1.5bn (EPS: PKR10.97).  The company’s major revenue is coming from exports, where in 2QCY21 42%/ 30%/ 6% revenues are coming from US/ Middle East/ Europe.

  • SYS has maintained a revenue CAGR of 33% from 2016-20 and the growth in 2Q has increased further by 50% yoy to PKR3.5bn. Moreover, net profits of the company have increased by 69% yoy to PKR0.9bn in 2QCY21.

  • About 94% of its revenue is recurring and c.56% of the revenue comes from top 20 customers. Also, during the quarter SYS acquired 43 new clients, taking total number of active clients to 166. These are those clients which contribute at least US$50,000 in revenues. About 16 clients yield US$1.0mn or more in revenues.

  • SYS hired more than 500 new employees in 2Q, which included 200 fresh graduates. The company has also opened regional offices other than existing ones in other parts of the country to grab more employees, especially fresh graduates.


  • SYS’s focus will remain on Data, Digital and Cloud for future growth; the company foresees massive opportunities in these 3 services. Among the verticals, SYS will continue to focus on Telco, Retail & CPG, BFS, Technology and BPO sectors in the existing markets.

  • During 2QCY21, SYS invested US$3mn in return for 20% stake in Retailistan. The aim behind the investment is to create synergies between Retailistan and One Load for the payment solution and payment gateways (merging and capitalizing on the vast customer data of both entities). One Load has obtained the EMI license from the SBP and is expected to kick-off E-wallet business in 3Q.

  • Retailistan has a fully owned subsidiary Jugnu, which is working on first round of investment from international venture capital firms, same as its direct competitors Retailo, Bazar and Tajir has recently obtained.

  • The management guided that One Load (EP Systems) has been doing well in terms of market penetration and so far the company has a network of c.43,000 retailers in Pakistan. EP added 644 new employees in the past six months, in light of the launch of E-wallet business under the banner of One-Load.

  • Commenting on future growth, management mentioned that the current growth momentum is likely to continue in the longer run. This is mainly backed by higher growth coming from all business verticals – asserting that the base of the company remains very small as compare with the total addressable market, with expected global IT services spending of US$4.1trn in 2021 (as per Gartner Research).

We have a Buy stance on the scrip with a December 2022 TP of PKR950/sh.