Cirtek 3Q Profit Up 36%

Laguna—(PHStocks)—Cirtek Holdings Philippines Corp. (PSE: TECH) today announced the results of operations for its third quarter and nine months ended September 30 2015.

Third Quarter Performance Highlights

  • TECH continued to register strong results with consolidated revenue of $17.1 million and net income after tax (NIAT) of $4.9 million for the quarter.
  • Consolidated revenue increased by 21% and NIAT increased by 36% compared to the third quarter of 2014.
  • Gross margin was a healthy 25%. The improvement was mainly due to the increased percentage of high-margin products sold during the period, and to the Company’s continuing cost reduction programs
  • Manufacturing continues to focus on improving assembly and packaging capabilities, operational efficiency, and reduction of unit manufacturing cost.
  • Cirtek Advanced Technologies and Solutions (CirtekATS), the RF/Microwave/Millimeterwave subsidiary of TECH, recently bagged two major projects. CirtekATS was recently chosen by Sivers IMA of Sweden as manufacturer of E- and V-Band converters. CirtekATS also announced a multi-year manufacturing contract with Quintel, a US-based global manufacturer of advanced antennas. The contract is estimated to be worth between US$10-20 Milion for the first 12 months, with the potential to double within the next two to three years. Commercial operations for both projects are expected to commence in the first quarter of 2016.
  • “Our legacy business (semiconductor) and wireless broadband unit grew at a combined rate of 21% in terms of revenue. We delivered another solid quarter, putting us on pace to achieve our revenue and profit targets for 2015,” said Jerry Liu, Chairman and President of TECH.

Nine-month Performance Highlights

  • The company for the nine months ending September 30 2015 registered a 23% growth in consolidated net revenue and 44% growth in NIAT compared to the same period in 2014.
  • Consolidated net revenue for the nine months ending September 30 2015 amounted to $45.5 million, compared with $37 million for the same period in 2014. NIAT reached $8.2 million for the nine months ending 2015, up from $5.7 million for the same period in 2014. The growth was accounted for by sustained sales growth registered by both semiconductor and RF/Microwave/Millimeterwave businesses.
  • Net income for the nine months ending September 30 2015 attributable to TECH shareholders amounted to $8.2 million, or $0.024 per diluted share, an increase of 41% compared to the $0.017 per diluted share for the same period in 2014.
  • “We expect to sustain our strong performance for the rest of the year. We will continue to work with our customers to deliver high-value products and services to the market, and enhance our market position in fast growing spaces such as wireless communication and automotive,” said CFO Anthony Buyawe

Market outlook

The global semiconductor industry is forecast to grow between 3-5% in 2016. By end application, automotive and wireless communications are projected to grow stronger than the total market, whereas consumer and computer are assumed to register slower growth.

The global millimeter wave technology revenue market is expected to grow at a CAGR of 45%, with a total addressable market of US$12 Billion by 2020. The dramatic surge in wireless data traffic and need for wider network coverage will require operators to make significant investments in the backhaul space.

On the The Internet of Things (IoT), the number of connected devices is expected to increase from 12.7 billion in 2014 to 50 billion in 2020. The value of the IoT market is expected to rise from $3.5 billion in 2014 to $8.9 billion in 2020. Millimeter wave technology will be the next generation technology that can provide up to multi-gigabytes per second (Gbps) wireless connectivity to support the explosion in mobile data traffic resulting from IoT.

Future plans

“Consistent with our strategy to leverage off our in-house technology capabilities, we will be setting up a new subsidiary that will provide both connectivity and content,” Liu said.

The new business of TECH will be engaged in the following activities:

  • Provide infrastructure solutions to enterprise networks by integrating various wireless and wired connectivity options.
  • Offer indoor and outdoor communications network design, installation and commissioning services using appropriate enterprise solutions that are tested and proven.
  • Set up a test bed network to test various emerging wireless solutions like millimeter wave backhaul radios and outdoor/indoor point-to-multipoint access radios.

“Through disciplined execution, TECH has placed itself in a strong position to take advantage of major market and technology trends and to further expand our business segments,” Liu said

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