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The Pakistan Credit Rating Agency Limited
Press Release

Date
22-Nov-22

Analyst
Sohail Ahmed Qureshi
sohail.ahmed@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Air Link Communication Limited

Rating Type Entity
Current
(22-Nov-22 )
Previous
(22-Nov-21 )
Action Maintain Upgrade
Long Term A A
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Air Link Communication Limited (“Airlink” or “the Company”) is principally engaged in the distribution and retail business followed by assembling of mobile devices and allied items in Pakistan. The ratings reflect Airlink’s sustainable business fundamentals underpinned by its solid market position. The Company is the official partner of multiple leading global brands to ensure diversified earnings from its core business line. Pakistan’s telecom industry is one of the fastest growing segments of the economy. With successful execution of DIRBS, the local assembly industry has evolved from infancy to well growing stage. Government of Pakistan introduced a comprehensive Mobile Manufacturing Policy to attract manufactures to Pakistan and establish their plants. PTA has issued MDM authorizations to 30+ foreign & local companies to create more jobs in technical sector and enable consumers to buy locally. During first nine months (Jan-Sep) of 2022, the local plants manufactured/assembled ~16.7mln handsets as compared to ~1.24mln commercially imported ones. Favorable policies, trade & investment liberalization, and healthy competition promoting shared industry prosperity. Following, the Company captures market share of around ~22% in mobile phone distribution. On an accumulated basis, topline of the Company continued to witness reasonable growth on a Year-on-Year basis primarily on back of higher prices, followed by more volume. During FY22, Airlink joined hands with Xiaomi, a global electronics & smartphones brand, to manufacture/assemble Xiaomi mobile phones in Pakistan through its wholly owned subsidiary “Select Technologies (Pvt) Limited” for which the commercial production was initiated in Mar-22. Further, the Company retained its profitability matrix despite tough macroeconomic conditions and high cost of doing business. Funds received through IPO ramped up Company’s equity base; keeping capital structure moderately leveraged mainly comprised of STBs. With its legal status converted into a Public Listed Entity, several improvements in the governance structure were witnessed including induction of independent directors. Financial risk profile of the Company is reflected by slightly stretched working capital cycle, comfortable coverages, and healthy cash flows.
The ratings are dependent on the Company’s ability to sustain its relative position amidst changing industry environment. As business grows, prudent financial discipline - particularly in working capital structure, is essential to uphold the ratings.

About the Entity
Airlink was formed as a partnership firm in 2010 for import & distribution of IT-related products & services. In 2014, a new private company was incorporated simultaneously to take over the business of the partnership firm. During 2018, entire partnership business transferred to the Company's books and later in 2019, it got converted into a Public Unlisted Entity. During Sep-21, Airlink was eventually listed on PSX. Mr. Muzaffar Hayat (CEO) & the family own majority stake in the Company while remaining shareholding rests with General Public, Insurance Companies, Banks, DFIs, NBFIs, and others. Mr. Muzaffar Hayat holds an overall experience of ~28 years. He is being assisted by a team of qualified professionals.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.