PACRA Assigns Preliminary Ratings to Select Technologies Limited | PPSTS-V | PKR 3.0bln | TBI

Select Technologies Limited (hereafter referred to as ‘SELECT’ or ‘the Company’) is set to issue its fifth Rated, Secured, Privately Placed, Short-Term Sukuk-V, valued at PKR 3.0 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 lien-marked Debt Payment Account (“DPA”) with the Investment Agent, depositing PKR 1,000 million at least 50 days before maturity, followed by one-third of the remaining amount every 15 days, so that the full issue amount is available in the DPA at least 5 days before maturity. The issue incorporates a built-in call option, allowing the Company to redeem the facility, in full or in part (minimum PKR 500 million and integral multiples thereof), after 30 days from first disbursement by giving 15 days’ prior written notice to the Lenders/Financiers. SELECT is a wholly owned subsidiary of Air Link Communication Limited (AIRLINK), engaged in the manufacturing, assembly, and sale of Xiaomi smartphones and accessories in Pakistan. Backed by its parent’s support and a sustainable business model, the Company has established a strong position in Pakistan’s technology sector. During 3MCY26 (Jan–Mar’26), local mobile phone production declined ~2.6% YoY to 7.36 million units, comprising ~3.94 million 2G phones and ~3.42 million smartphones, while imports increased to 1.22 million units. The divergence between declining local output and rising imports reflects growing consumer preference for premium, technologically advanced handsets, while also highlighting competitive and demand-side pressures on domestic assemblers. During 9MFY26, the Company’s topline declined ~37.1% to ~PKR 23,052mln (FY25: ~PKR 48,893mln). The decline reflects both the phase-out of high-volume, low-margin 4G devices as Select shifts its product mix and softer industry-wide smartphone demand. Despite lower sales, profitability improved, with gross, operating, and net margins reaching ~16.2%, ~13.4%, and ~5.8%, respectively. Select funds its working capital through a mix of bank borrowings and short-term papers, while maintaining disciplined leverage limits. Although gross leverage appears high, net leverage, adjusted for cash and guarantee margins, remains within a manageable range, in line with the purpose of the funding. On the operational front, the Company has successfully launched and commenced production of Hisense air conditioners and LED TVs at its new facility in Sundar. Going forward, effective working capital management and the successful commercialization and scale-up of these newer product categories will remain critical to sustaining operational momentum, profitability, and overall financial stability.
Sustained compliance with pre-agreed financial matrix, reflecting adherence to a well-defined and disciplined financial framework, remains important. Furthermore, the successful execution of the post-commissioning deleveraging trajectory, timely commercialization and operational stabilization of the SGSEZ facility, along with prudent liquidity and robust working capital management, shall remain imperative.

About the Entity
Select Technologies 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-IV of PKR 3.5bln is the available sukuk in the market, which will mature soon. The PPSTS-V 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 Issue is backed by a corporate guarantee from its parent company, AIRLINK, covering the outstanding issue amount along with any accrued markup throughout the tenor of the Issue.