PACRA Assigns the Initial Ratings to Select Technologies (Pvt.) Limited | PPSTS-II | PKR 3.5bln | Jun-25

Select Technologies (Private) Limited (hereafter referred to as ‘SELECT’ or ‘the Company’) is a wholly owned subsidiary of Air Link Communication Limited. The Company specializes in manufacturing, assembling, and selling smartphones and related accessories in Pakistan under renowned mobile phone brands. SELECT has established itself as a key player in Pakistan’s technology sector, backed by a sustainable business model and strong support from its parent company. In 2022, SELECT partnered with Xiaomi Corp., becoming its official assembly partner in Pakistan. This collaboration resulted in the creation of a state-of-the-art assembly line in Lahore, with an annual capacity of ~2.7mln mobile phones and ~150k LED units on a single shift. Xiaomi remains one of the world’s leading smartphone manufacturers, known for delivering high-quality products at competitive prices. In 1QCY25, Xiaomi shipped over 42mln smartphone units globally (1QCY24: 41mln), capturing ~14% share of the global smartphone market. In China, Xiaomi holds the largest market share (18.8%), following Huawei (18.4%) and Oppo (14.9%). The strategic partnership between Xiaomi and SELECT is designed to drive revenue growth through efficient supply chain management, a competitive pricing strategy, and an expanding market presence in Pakistan’s telecom sector. The local industry is advancing steadily, fueled by expanding network coverage, a wide array of mobile devices, increasing technological demand, and the widespread adoption of mobile phones among Pakistan’s ~225mln population. The market is rapidly shifting from feature phones to smartphones; however, mobile phone assembly volumes declined by ~6% YoY to ~17.83mln units during 7MCY25 (CY24: 31.8mln units) due to excessive pre-buying in June 2024 ahead of anticipated budget changes. In line with this trend, Xiaomi Pakistan, the Company’s principle, also recorded a moderation in demand pending new model launches, leading to a ~33.4% YoY decline in SELECT’s sales during FY25. However, the Pakistan Telecommunication Authority’s (PTA) latest statistics indicate a rebound, with 3.59mln units assembled in July 2025 (up 123% YoY), and industry sales are projected to grow by 7–8% YoY over the next 12 months, supported by normalized base effects and easing inflation. With the launch of new Xiaomi models, demand is expected to strengthen further, enhancing prospects for SELECT’s volume rebound in the near term. SELECT operates with a leveraged capital structure, primarily relying on short-term borrowings to fulfill the cash margin requirements for opening LCs for the import of mobile parts and components. The Company’s financial risk profile is characterized by an adequate working capital cycle, coverage ratios, and cash flows.
The rating depends on the Company’s ability to sustain its relative position amidst a changing industry environment and its sustainable business partnership with a global brand. Continued adherence to agreed financial covenants, particularly maintaining full coverage of free cash flows from operations (FCFO) to gross sukuk obligations and preserving the desired level of leverage, will remain imperative.

About the Entity
Select Technologies (Pvt.) Limited was incorporated in Pakistan on October 13th, 2021, as a private limited entity. The Company’s ~99.9% financial stake rests with AIRLINK (parent company).

About the Instrument
Select Technologies Pvt. Limited has issued its second Rated, Secured, Privately Placed, Short-Term Sukuk-II on June 16, 2025, valued at PKR 3.5 billion. This Sukuk features a markup of 6MK+1.75% with a tenure of six months and is secured by a ranking charge over the Company’s current assets. On PACRA’s suggestion, the Company has provided a corporate guarantee, covering the outstanding issue size and accrued markup in favor of the Investment Agent for Sukuk holders, to safeguard against any negligence or misconduct by STL during the tenor of the Issue.