Air Link Communication : Material Information - PACRA Ratings

AIR LINK COMMUNICATION LIMITED

Ref: ALC/PUCAR/2022-25

November 22, 2022

The General Manager

Pakistan Stock Exchange Limited

Stock Exchange Building

Stock Exchange Road

Karachi.

Subject: Material Information

Dear Sir,

In accordance with Sections 96 and 131 of the Securities Act, 2015 (the "Act") and pursuant to Regulation 5.6.1 of the PSX Regulations (the "Regulations"), Air Link Communication Limited pleased to inform the following:

The Pakistan Credit Rating Agency Limited (PACRA) issued press release on November 22, 2022 whereby PACRA maintains Entity Ratings of Air Link Communication Limited to "A" (Long Term) & "A1" (Short Term) with "Stable" outlook. For more details copy of press release is enclosed.

You may please inform the TRE Certificate Holders of the Exchange accordingly.

Yours Sincerely,

Amer Latif

Company Secretary

Copy to:

Executive Director/HOD,

Offsite-II Department,

Supervision Division,

Securities & Exchange Commission of Pakistan,

63, NIC Building, Jinnah Avenue,

Blue Area, Islamabad

152/1-M,Quaid-e-Azam Industrial Estate, Kot Lakh Pat, Lahore - Pakistan 042-35151345-6

Email: [e-mail] Web: www.airlinkcommunication.com

UAN: 042-111-667-468

0

The0Pakistan Credit Rating Agency Limited

Press Release

Date0

22-Nov-22

Analyst0

Sohail Ahmed Qureshi0 [e-mail]0 [phone] www.pacra.com

Applicable0Criteria

Methodology | Corporate

Rating | Jun-22

Methodology | Correlation

Between Long-term &

Short-term Rating Scales |

Jun-22

Methodology | Rating

Modifiers | Jun-22

Related Research

Sector Study | Mobile

Phone and Allied Products |

Dec-21

Disclaimer0

This press release is being transmitted0for the sole purpose of

dissemination0 through print/electronic media. The0 press release may be used in full or in part without changing the meaning or0 context thereof with due credit to0PACRA

PACRA Maintains Entity Ratings of Air Link Communication Limited0

		Entity
Rating0Type	Current0		Previous0
	(22-Nov-220)		(22-Nov-210)
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.0

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.

About0the Entity0

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 an0entity to honor its obligations. Our ratings reflect an independent, professional0 and impartial assessment of the risks associated with a particular instrument or an entity.0 PACRA's comprehensive offerings include instrument and entity credit ratings,0insurer financial strength ratings, fund ratings, asset manager ratings and real estate0gradings.0PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it0does not0comment on the security's market price or suitability for a particular investor.