Karachi, November 05, 2021 (PPI-OT): AIRLINK: Corporate briefing session key takeaways
AIRLINK Communications Limited held a briefing session today to discuss 1QFY22 results and outlook of the company. We present key takeaways from the session.
The company posted earnings of Rs420mn in 1QFY22 translating into an EPS of Rs1.14 compared to Rs0.93 in the SPLY, a 50% YoY increase. Gross margins rose 1ppt YoY and stood at 11%.
Margins during the first quarter increased due to contribution from the assembling operation, the assembling facility contributed ~20% to net profit. With increase in assembled phones, reliance on CBUs has declined resulting in lower debt and a decrease in finance cost in 1QFY22.
Lower availability of CBUs/SKDs due to supply chain issues and higher duties on CBU dampened sales on a YoY basis.
The company was able to maintain its market share across all brands. Brand wise market shares of AIRLINK during 1QFY22 were; SAMSUNG: 21%, XIAOMI: 24%, ITEL: 16% TECHNO: 50%
Out of total sales volume of ~675k units, 35% of the units were assembled at AIRLINK’s assembly plant.
Post reporting period, AIRLINK’s subsidiary Select Technologies Pvt Ltd entered into an agreement with Xiaomi, second largest global brand by market share, for the manufacturing of smartphones in Pakistan.
The estimated CAPEX to setup the facility is Rs1.7bn and the plant is expected to come online by Jan-2022. The company targets production of 2.5mn – 3.0mn units in the first 12 months on a single-shift basis.
AIRLINK will sell ~30% of the Xiaomi assembled phones and the management expects a contribution of Rs3.75-4/share to the bottom line from this segment.
According to the management, the annual targets shared at the time of IPO are expected to be met and the company believes it is on track to achieve all FY22 targets including Revenue target of Rs70bn and a ~Rs10 EPS.
Company is optimistic that the new mobile series launches scheduled for 2QFY22, 3QFY22 and 4QFY22 would further support growth.
The company has sufficient credit lines to fund working capital requirements of Xiaomi assembling unit.
Supply chain issues have largely resolved, meanwhile chip issues are expected to be resolved by Dec-2021. These factors would assist in resuming growth trajectory targeted for FY22.