PACRA Assigns Entity Ratings to Select Technologies (Pvt.) Limited

Select Technologies (Private) Limited (hereafter as ‘SELECT’ or ‘the Company’) is a wholly owned subsidiary of Air Link Communication Limited. The Company is currently engaged in the manufacturing/assembling, and sales of smartphones & allied items in Pakistan under renowned and leading mobile phones brand. The ratings reflect SELECT’s facility to do well in Pakistan’s technology world through its sustainable business profile underpinned by solid group support. In 2022, SELECT joined hands with Xiaomi Inc. and is considered to be as its official partner for the assembling of smartphones in Pakistan by setting up state-of-the-art assembling line in Lahore. Presently, it holds assembling capacity of around 600,000 mobile units per month. Xiaomi has consistently ranked among the world's top smartphone manufacturers by offering quality products at reasonable pricing. Xiaomi smartphones totaled over 153mln unit shipments, accounting for almost 13 percent of the global smartphone market and trailing only Apple and Samsung in terms of market share. In its home market, Xiaomi has the fifth-highest market share behind other local brands in Honor, OPPO, and Vivo. Xiaomi and SELECT partnered up to ensure earnings from its business line and benefiting from Pakistan’s telecom industry through efficient supply-chain management, competitive pricing model, and achieving growing market share. Providentially, the local industry is moving forward at a progressive rate. With expanding net coverage, myriad options of mobile devices available, ever-increasing demand for technology, and ubiquity of mobile phones and their uses among a wide cross-section of ~220mln people, the local market depicts a great potential (rapidly transitioning from feature phones to smartphones). Further, local assembling industry is evolving from infancy to mounting stage post-execution of DIRBS, curbing illegal import channels in the country to target domiciliary production and then exports. Favorable policies, trade & investment liberalization, and healthy competition promoting shared industry prosperity. Following the trend, SELECT captures market share of around 40% in mobile phone assembling. During 1HFY24, the Company witnessed a significant growth in its topline and recorded PKR 31.5bln sales on a year-on-year basis as an outcome of both rising volume and higher prices of smartphones. The Company’s net profitability matrix has also improved during review period fueled by sales growth. SELECT’s capital structure is leveraged; mainly comprised of STBs to serve 100% cash margin requirements at the time of opening LCs for import of mobile parts / components. Financial risk profile is reflected by efficient working capital cycle, comfortable coverages, and healthy cash flows.
The ratings are dependent on the Company’s ability to sustain its relative share amidst changing industry environment and its sustainable business partnership with global brand. As business grows, prudent financial discipline - particularly in capital structure, is essential to uphold the ratings.

About the Entity
Select Technologies (Pvt.) Limited was incorporated in Pakistan on October 13th, 2021 as a private limited entity. Its registered head office is located at Quaid-e-Azam Industrial Area Kot Lakhpat, Lahore, Pakistan. The Company’s ~99.999% financial stake rests with AIRLINK (parent company). The board of SELECT comprises five members, including Mr. Muzzaffar Hayat Paracha (Group CEO / Director) and Mr. Adnan Aftab (CEO of SELECT), both individuals are associated with the group for over two decades and hold related industry experience. They are being assisted by a qualified team.