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

Select Technologies Pvt. Limited (‘SELECT’ or ‘the Company’) is set to issue its fourth Rated, Secured, Privately Placed, Short-Term Sukuk-IV, valued at PKR 3.5 billion. The underlying instrument is secured by a ranking charge over the Company’s current assets. To ensure repayment discipline, the Issuer shall maintain a Debt Payment Account (“DPA”) under the Investment Agent’s lien to ensure repayment discipline. The Issue will be redeemed in three (3) equal installments of one-third (1/3) each of the Issue Amount, starting at the end of the 4th month from the Issue Date, with each installment deposited into the DPA at least three days before its respective redemption date. 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 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. During 10MCY25, the Pakistan Telecommunication Authority’s (PTA) latest statistics reflect a marginal ~4% decline in local mobile assembly, with total volumes at 25.11mln units. Conversely, commercial imports increased by ~20% YoY, highlighting a shift toward imported devices amid evolving market dynamics. Reflecting this broader industry softness, the Company also experienced moderated demand from its principal, Xiaomi Pakistan, which led to 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. Furthermore, the parent company recently announced on PSX, the incorporation of its another wholly owned subsidiary, to undertake the manufacturing, import, export, distribution, retail, and e-commerce operations of smartphones, laptops, accessories, electronics, home appliances, and other technology products of certain additional selected brand(s). The Company’s financial risk profile is characterized by an adequate working capital cycle, coverage ratios, and cash flows. 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. To support further liquidity and working capital needs, the Company is planning to issue this new short-term sukuk of PKR 3,500 million.
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
Currently, SELECT’s PPSTS-II’s DPA has been filled and will be redeemed in a due course of time, while SELECT’s PPSTS-III of PKR 2.0bln is available in the market. The PPSTS-IV will carry a markup of 6MK+1.20% with a tenure of six (6) months, and will be redeemed in bullet at the expiry of Tenor. Additionally, the Company has also included a corporate guarantee of its parent company as a security, which will be equivalent to the outstanding issue size plus any accrued mark up during the tenor of the Issue.