The management of Air Link Communication Limited held an analyst briefing session on 17nd Oct’24 to discuss the company’s performance and future outlook.
Brief Takeaways
- To recall, the company posted a net profit of PKR 4.6bn (EPS: PKR 11.7) in FY24 compared to PKR 961mn (EPS: PKR 2.4) in SPLY, up by 382% YoY. On a quarterly basis, earnings arrived at PKR 1.5bn (EPS: PKR 3.92) in 4QFY24, up by 22x YoY.
- Air Link Communication is a top-tier distributor, manufacturer, and retailer of smartphones in Pakistan, with an expanding product line includes TVs and laptops.
- While the company achieves higher gross margins in standalone assembly, Select Technology, being a larger company, faces a time lag in reaching full operational efficiency, impacting its margins.
- The recent shift in brand mix has led to a temporary decline in distribution margins. However, the management expects these margins to recover.
- The company is set to start TV production in December ’24. Pakistan’s annual TV demand is estimated at 0.8mn units, and Air Link’s TV is priced competitively at USD 400.
- The company is also tapping into Pakistan’s growing laptop market, with an annual demand of around 2.0mn units. The laptops are expected to be priced at under PKR 100,000. The company plans to maintain a normal capital expenditure of around USD 500k in the coming years, focusing on scaling production and operational efficiency.
- The company projects a revenue growth rate of 10-20%, supported by the expanding demand for its products and potential new market entries.
- Due to Pakistan’s duty structure and raw material costs, the costs of completely built units (CBU) of mobile phones are 30% higher than those of semi-knocked-down (SKD) units. This makes SKD assembly more cost-effective. Currently, the company is operating at 40% capacity utilization but can easily scale up to meet the rising demand within Pakistan.
- The management highlighted ongoing discussions with the government to develop export strategies. Once finalized, the company expects significant growth opportunities in the mobile phone export market.
- The management stated that it has imported two electric vehicles (Xiaomi SU7) from China for testing purposes and is evaluating the demand dynamics. At this stage, there is no formal agreement between Air Link and Xiaomi regarding the assembly or distribution of these vehicles.
Courtesy – AHL Research
