PACRA Assigns the Initial Ratings to Select Technologies (Pvt.) Limited | PPSTS-III | PKR 2.0bln | Oct-25

Select Technologies Private Limited (hereafter referred to as ‘SELECT’ or ‘the Company’) has issued its third Rated, Secured, Privately Placed, Short-Term Sukuk-III, valued at PKR 2.0 billion on October 28th, 2025. The underlying instrument is secured by a ranking charge over the Company’s current assets. SELECT is a wholly owned subsidiary of Air Link Communication Limited (AIRLINK). The Company specializes in manufacturing, assembling, and selling smartphones and related accessories in Pakistan under renowned mobile phone brands. SELECT has established itself as one of the key players in Pakistan’s technology sector, backed by a sustainable business model and strong support from its parent company. During 11MCY25, PTA statistics show a marginal ~4.1% YoY decline in local mobile assembly to 27.6mln units, with 2G devices accounting for ~47% of output, underscoring limited penetration of higher-value smartphones. This production skew constrains value addition, margins, and technological upgrading. However, the gap between feature-phone dominance and rising smartphone demand indicates latent growth potential in local smartphone assembly, subject to supportive policies, scale efficiencies, and targeted 5G localization initiatives. Mirroring this trend, the Company experienced moderated demand from its principal, Xiaomi Pakistan, resulting in lower production and a reduced market share among leading brands. Nonetheless, SELECT’s standalone performance improved in 1QFY26, with QoQ net sales rising to ~PKR 11,332mln, supported mainly by improved pricing. Margins also strengthened across all levels, supported by lower COGS, enhanced operational efficiency, and higher non-core income. Airlink meets its working capital needs through a mix of bank borrowings and short-term papers. The Company has designed a discipline around the total leverage and the extent of commercial borrowings. At absolute level, the leverage appears high, but net of cash and guarantee margin, the leverage turns out to be in the manageable range, which is the objective of raising the funds. The debt payment account, which is filled rigorously from internal cash flows, mitigates the risk as well. Furthermore, the parent company announced on PSX the incorporation of another wholly owned subsidiary to undertake manufacturing, import, export, distribution, retail, and e-commerce of smartphones, laptops, accessories, electronics, home appliances, and other technology products of selected additional brands. To support expansion and liquidity, the Company issued PPSTS-III of PKR 2,000mln as short-term bridge financing for immediate CAPEX ahead of a syndicated long-term facility. The instrument also carries a call option, allowing early redemption upon the availability of long-term funding, which has not been exercised yet. Additionally, the Issuer remains committed to cap working capital facilities to keep PKR 2,100mln unutilized throughout the Sukuk’s tenor as a repayment back-up, with PACRA monitoring these unutilized limits on a weekly basis.
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 critical.

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
The Sukuk caries a markup of 6MK+1.35% with a tenure of six months and is secured by a ranking charge over the Company’s current assets. Additionally, the Company has provided a corporate guarantee covering the outstanding issue amount plus accrued mark-up, in favor of the Investment Agent for the benefit of the Privately Placed Short-Term Sukuk holders throughout the tenor of the issue.