PACRA Assigns Preliminary Ratings to Select Technologies (Pvt.) Limited | PPSTS-II | PKR 3.5bln | TBI

SELECT Technologies (Private) Limited (“SELECT” or “the Company”) is a wholly owned subsidiary of Air Link Communication Limited, specializing in the manufacturing, assembly, and distribution of smartphones and related accessories in Pakistan. Leveraging strong backing from its parent company and a robust, sustainable business model, SELECT has emerged as a prominent player in the country’s rapidly evolving technology sector. In 2022, SELECT entered into a strategic partnership with Xiaomi Inc., becoming its official assembly partner in Pakistan. This collaboration led to the establishment of a cutting-edge assembly facility in Lahore, currently operating with a capacity of 2.7 million units per year (single shift). Xiaomi, one of the world’s top smartphone manufacturers, is globally recognized for delivering high-quality devices at competitive prices. In 2024, Xiaomi shipped over 169 million smartphones globally (up from 153 million in CY23), securing approximately 14% of the global market share. In China, Xiaomi ranks third with a 15.7% market share, following Vivo (18%) and Huawei (16.3%). The partnership between SELECT and Xiaomi is strategically aimed at driving revenue growth through streamlined supply chain operations, competitive pricing, and an expanding footprint in Pakistan’s telecom market. The local mobile industry continues to gain momentum, propelled by improved network infrastructure, rising consumer demand, and the increasing shift from feature phones to smartphones among Pakistan’s population of ~225 million. Moreover, the local assembly industry has experienced substantial growth, increasing from 11.7mln units in CY19 to a record 31.8mln units in CY24 (CY23: 21.3 million). This expansion has been significantly supported by the Device Identification Registration and Blocking System (DIRBS), a government initiative aimed at curbing illegal handset imports and encouraging local manufacturing and exports. According to the Pakistan Telecommunication Authority’s (PTA) latest statistics, SELECT holds ~13% market share of the local smartphone assembly and ~8% of total mobile devices manufactured (including 2G). During 9MFY25, the Company’s revenue declined by ~20.9% to PKR 40.8bln compared to the same period last year, mainly due to a temporary dip in demand caused by higher taxes. However, as per the management’s representation price adjustments have now been absorbed by the market, and sales volumes are rebounding. 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 efficient working capital cycle, adequate coverage ratios, and cash flows.
The rating depends on the Company’s ability to sustain its relative position amidst changing industry environment and its sustainable business partnership with global brand. With topline growth, prudent financial discipline - particularly in capital structure and cashflows, 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 plans to issue a Rated, Secured, Privately Placed, Short-Term Sukuk 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. Additionally, the Company has also included a corporate guarantee as a security on PACRA’s suggestion, which will be equivalent to the outstanding issue size plus any accrued mark up in favor of the Investment Agent for the benefit of Privately Placed Short Term Sukuk holders during the tenor of the Issue in case of any negligence or misconduct on the part of STL.