LAGUNA-BASED Cirtek Holdings Philippines Corp. on Thursday said it secured an above-average score from a local ratings firm for the company’s P2 billion float worth of commercial papers.
The company said it received PRS A (corp.) with a stable outlook from the Philippine Ratings Services Corp. That rating means that Cirtek has an above average capacity to meet its financial commitments relative to that of other Philippine corporates.
The company, however, is more susceptible to adverse changes in circumstances and economic conditions than higher-rated corporates, according to its ratings.
The rating was based on the company’s manageable liquidity and capitalization levels; its established track record in the industry, supported by a strong and experienced management team that has navigated the group through economic cycles, crises and industry challenges; strong customer base of well-established and global companies; improved profit margins despite lower revenues, attributable to the company’s cost management efforts; and highly competitive and cyclical industry that is susceptible to adverse changes.
Cirtek’s P2-billion debt is part of its P6-billion shelf registration of commercial papers with the Securities and Exchange Commission.
Cirtek is a global technology company focused on wireless communication. It is an independent, complete solutions provider for subcontract manufacturing of semiconductor devices and provides a broad range of assembly and testing services for various product applications and industries. The company has been offering its products and services to several customers in the US, which in 2019 contributed half of its revenues, Europe at 19 percent and Asia at 30 percent.
“Such exposes (Cirtek) to diversified risks relating to the performance of the economies where these customers are based, particularly with the ongoing recession in most countries brought about by the Covid-19 pandemic,” its ratings said.
The industry is highly competitive and cyclical in nature, with the company operating in a market with larger international players. In response to this, however, the group has made recent moves to provide more complex patented products to give itself a competitive edge and to be able to achieve higher margins,” it said.
The telecommunications sector, which comprises a huge portion of Cirtek US unit Quintel’s customers, currently has a positive industry outlook due to a surge in the traffic of data and voice.
In sharp contrast to many other industries, telecom has been exempted from major Covid-19-related restrictions and is recognized as an essential service, it said.
Quintel manufactures base station antennas for the telecommunications sector.
Cirtek is seen to attain a much more conservative capital structure in the future, on account of its planned equity raising activities and the continuous payment of existing debt, the ratings firm said.
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