A LOCAL DEBT watcher said Cirtek Holdings Philippines Corp. has above average ability to meet its financial commitments in relation to its proposed P2-billion commercial papers.
In a statement Monday, Philippine Rating Services Corp. (PhilRatings) said it gave the listed electronics manufacturer a “PRS A (corp.)” credit rating for its planned three-year shelf registration for commercial papers. The rating was given a stable outlook, meaning it is expected to hold for the next 12 months.
Cirtek is planning to raise up to P2 billion through the issuance of commercial papers to refinance its existing debt and fund its working capital requirements. The commercial papers may have a tenor of 91, 182 or 364 days.
PhilRatings said it gave Cirtek this credit rating due to its track record, strong customer base, increasing revenue year on year and adequate liquidity in relation to debt servicing obligations, aside from the cyclical nature of the electronics industry.
The debt watcher said the company has a leadership that has been around for more than 35 years, surviving the “economic ups and downs and political crises” that the country faced over the years. PhilRatings said being able to stay competitive throughout that span of time shows the company has the ability to weather possible economic storms.
It also acknowledged the growth of the company’s revenues reaching 20% to $106.5 million at the end of 2018. It noted, however, that Cirtek’s revenues fell 11.3% in the first half of 2019 due to a slowdown in its subsidiary Quintel and the impact of the trade war between United States and China.
But PhilRatings said the electronic industry is “highly competitive and cyclical in nature,” as Cirtek’s operations crosses national borders and is therefore vulnerable to movements in larger economies.
“Such has resulted in modest growth during the group’s 35 years of operations. 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,” the debt watcher said.
It also noted of opportunities for the company from the rise of fifth generation network and the Internet of Things, which may pull up the demand for its business.
“Such provide opportunities for (Cirtek) to expand its product portfolio in the medium-term, ranging from components and millimeter waves to antennas,” PhilRatings said. — Denise A. Valdez
