Airlink - Pakistan's biggest private-sector IPO
With another IPO around the corner, InvestKaar unpacks the prospectus, business model, and financials, so it becomes easy for you to decide.
With another IPO around the corner, InvestKaar unpacks the prospectus, business model, and financials, so it becomes easy for you to decide.
Transaction details:
Airlink is looking to raise 3.9bn by offering 60mn shares to the public. At a base price of Rs65/sh, IPO size will be Rs5.8bn, and at the cap price of Rs91/sh, the amount will rise to Rs8.1bn
The proceeds will be utilized to finance working capital needs
Airlink is looking to raise 3.9bn by offering 60mn shares to the public. At a base price of Rs65/sh, IPO size will be Rs5.8bn, and at the cap price of Rs91/sh, the amount will rise to Rs8.1bn
The proceeds will be utilized to finance working capital needs
* Industry: Rs258bn industry and growing fast
The market is divided into the following:
Premium (priced at Rs80k+), high-end (priced between Rs48k-80k), mid-end (between Rs16k-48k), and low-end (Rs16k and less).
Mid-end generates the most sales (73%) followed by low-end at 17%
The market is divided into the following:
Premium (priced at Rs80k+), high-end (priced between Rs48k-80k), mid-end (between Rs16k-48k), and low-end (Rs16k and less).
Mid-end generates the most sales (73%) followed by low-end at 17%
About Airlink:
- Airlink is a mobile phone distributor and has expanded into retail with 14 stores - market share btw 17-21%
- It has distribution agreements with Samsung, TCL, Huawei Tecno, Itel and is a sub-distributor for Apple products.
- Airlink is a mobile phone distributor and has expanded into retail with 14 stores - market share btw 17-21%
- It has distribution agreements with Samsung, TCL, Huawei Tecno, Itel and is a sub-distributor for Apple products.
- It is growing fast, CAGR of 36% for revenues and 49% for mobile phones sold in the last 5 years.
- It has established its own assembling plant to assemble 400k units per month. Currently, they are assembling 150k units per month
- It has established its own assembling plant to assemble 400k units per month. Currently, they are assembling 150k units per month
Business Model - Follow the cash
Distribution is a working capital cycle business. The higher a company rolls its cash, the better its earnings would be. Cash conversion cycle for mobile distributor:
Distribution is a working capital cycle business. The higher a company rolls its cash, the better its earnings would be. Cash conversion cycle for mobile distributor:
Airlink Working Capital Cycle:
Growth Opportunities:
- Switching from feature to smartphones. Only 18% of the Pakistani population owns a smartphone
- Increasing adoption of 3G and 4G (100mn users now vs 29mn in FY16) due to more use cases
- Local assembly may bring down phone prices
- Switching from feature to smartphones. Only 18% of the Pakistani population owns a smartphone
- Increasing adoption of 3G and 4G (100mn users now vs 29mn in FY16) due to more use cases
- Local assembly may bring down phone prices
Risks:
- The economic slowdown may lead to a slower cash conversion cycle
- Growth in market share of brands that Airlink doesn’t distribute (OPPO, VIVO, and Infinix)
- Threat of new entrants
- The economic slowdown may lead to a slower cash conversion cycle
- Growth in market share of brands that Airlink doesn’t distribute (OPPO, VIVO, and Infinix)
- Threat of new entrants
Want to know more? Read up our detailed yet simple company analysis at investkaar.com/airlink-pakist…
Did you like it? Do subscribe to our weekly newsletter at investkaar.com
Happy Investing
Did you like it? Do subscribe to our weekly newsletter at investkaar.com
Happy Investing
• • •
Missing some Tweet in this thread? You can try to
force a refresh
