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

Select Technologies Limited (hereafter ‘SELECT’ or ‘the Company’) is set to issue its sixth Rated, Secured, Privately Placed, Short-Term Sukuk-VI, valued at PKR 3.0 billion, inclusive of a green shoe option of PKR 1.0 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 750 million at least 47 days before maturity, and every fortnight thereafter, such that an amount equivalent to full issue amount is available in the DPA 05 days before the maturity date. SELECT is a wholly owned subsidiary of Air Link Communication Limited (AIRLINK), engaged in the manufacturing, assembly, and sale of Xiaomi smartphones, Xiaomi TVs, Hisense TVs, and Hisense ACs in Pakistan. The Company is in the final stages of its IPO, with the book-building phase oversubscribed by ~3.2x. The IPO is expected to strengthen SELECT's equity base, enhance financial flexibility, and improve leverage metrics. Backed by its parent’s support and a sustainable business model, the Company has established a strong position in Pakistan’s technology sector. During 5MCY26 (Jan–May ’26), local mobile phone production declined ~11.26% YoY to 11.17 million units, comprising ~6.25 million 2G phones and ~4.92 million smartphones, while imports increased to 1.91 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 23,052 mln (FY25: ~PKR 48,893 mln). 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, prudent deployment of IPO proceeds, and the 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). However, the completion of the IPO will result in changes to the ownership structure.

About the Instrument
Currently, SELECT’s PPSTS-V of PKR 3.0bln is the available sukuk in the market. The PPSTS-VI will carry a markup of 6MK+1.10% with a tenure of six (6) months and will be redeemed in a bullet at the expiry of the 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.