As per the latest data released by the Pakistan Telecommunication Authority (PTA), local mobile companies have manufactured/assembled 1.61mn units, down 20% YoY & 62% MoM in Jul-2024.
The decline in mobile sales in July 2024 is due to pre-buying in June 2024 following the announcement of an 18% GST on all mobile phones in the FY25 budget.
However, in the last two months (Jun-Jul 2024), average sales were 2.9mn units, which is still higher than the 5-month (Jan-May 2024) average of 2.6mn units.
In 7M2024, total locally manufactured/assembled sales reached 18.95mn units up 2.3x YoY. This significant improvement is mainly due to the import restrictions imposed last year.
However, compared with 7M2022, the growth is 27% YoY. This growth is mainly driven by gradual economic recovery, an increasing share of locally assembled mobile phones amid higher taxes on imported phones, and a growing population, among other factors.
Within the locally assembled mobile phones of 18.95mn units during 7M2024, 64% (12.1mn units) are smartphones, while the remaining 36% (6.85mn units) are 2G phones.
The top 10 locally assembled brands during 7M2024 include Infinix (2.76mn units), followed by Itel (2.12mn units), VGO Tel (2.01mn units), Tecno (1.96mn units), Vivo (1.71mn units), Xiaomi (1.70mn units), Realme (1.15mn units), Nokia (0.83mn units), G’Five (0.71mn units), and OPPO (0.63mn units).
Outlook: According to our channel checks, based on the current monthly run rate and the recent imposition of an 18% sales tax on all mobile phones in Budget FY25, total mobile phone demand may reach 33 million units in 2024 vs. 22.9 million units sold in 2023, up 44% YoY.
Buy stance on AIRLINK: Within the listed sector, Air Link Communication (AIRLINK) is well positioned to capitalize on rising smartphone sales in Pakistan. We have a buy stance on AIRLINK, with the stock trading at an FY25F P/E of 8.7x and an FY26F P/E of 8.2x, compared to its 3-year average P/E (since IPO) of 10.0x, representing discounts of 14% and 19%, respectively.
Courtesy – Topline Pakistan Research
