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The Pakistan Credit Rating Agency Limited
Press Release

Date
28-Jun-19

Analyst
Muhammad Nadeem Sheikh
nadeem.sheikh@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Airlink Communication Limited

Rating Type Entity
Current
(28-Jun-19 )
Previous
(31-Dec-18 )
Action Maintain Upgrade
Long Term A- A-
Short Term A1 A1
Outlook Stable Stable
Rating Watch Yes -

The ratings denote Airlink’s adequate operational sustainability underpinned by its solid market position, balanced earnings contributions from its mobile business, as well as its strong financial profile. Over the last few years, the Company has improved its business profile. The company’s topline is witnessing ample growth mainly because of increase in sale of Huawei and Samsung. However, growth in topline has slowed down during the period under review due to decrease in sales of Huawei mobile phones. Huawei is the major contributor in the company's total revenue. Further decrease in Huawei's market share will negatively impact company's revenue. The management has represented that Huawei will be emerging from this challenge, after amicable settlement of this dispute. Hence, the rating watch. FCFO of the company witnessed decent improvement owing to higher EBITDA. Improvement in governance structure is being witnessed as the company is in process to induct three independent directors on the board. The company’s import driven business model is secured against cash margin with insurance for the in-transit. The company's financial risk profile is adequately covered. The company has enduring emphasis on control environment, as endorsed by the sponsors. A reflection of this is transition towards corporate structure and audit quality. Move is on the horizon for public listing. Ratings incorporate that Airlink operates in a fast moving market where timely introduction and sale of products is crucial.
The ratings are dependent on the company’s ability to strengthen its market position, gain in terms of EBITDA and profitability margins. Continuous improvement in governance structure and sustenance of revenue is essential for the ratings. Seamless financial discipline is important.

About the Entity
Airlink was formed in 2010 as a partnership firm for the import and distribution of IT products and related services. In 2014, a new private company was incorporated simultaneously to take over the business of the partnership firm running as a family business. After July 2018, the entire business of the partnership has been transferred to the company's books. The Company is owned by sponsoring family. Mr. Aslam Hayat Piracha and Mr. Muzaffar Hayat are the current board members and the major shareholders of the company.

Mr. Muzaffar Hayat Piracha is the CEO of the company. He has the overall experience of 26 years. He is being assisted by experienced professionals. EY Ford Rhodes Chartered Accountants is the external auditor of the company and they have expressed un-qualified opinion on financials for period of 9MFY19.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.