Cirtek nets $1.9M

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Laguna-based electronics manufacturer Cirtek Holdings Philippines Corp. grew its first quarter net profit by 14 percent year-on-year to $1.9 million on higher sales coupled with improved margins.

Consolidated revenues for the three-month period rose by 53 percent year-on-year to $25.9 million while gross margin increased to 30 percent compared to 19 percent in the same period last year, Cirtek disclosed to the Philippine Stock Exchange.

The margin improvement was driven by the sales contribution of newly-acquired Silicon Valley-based antenna manufacturing business Quintel alongside the recognition of Cirtek Advanced Technologies and Solutions Inc. (CATSI)’s gross profit from sales to Quintel in the first quarter of 2018.

Revenue contribution from Quintel for the three-month period amounted to $14.7 million. For the same period, Quintel registered a net loss of $1.1 million.

However, the company reported that Quintel had achieved break-even position in the month of March and was expected to be profitable starting the second quarter of 2018.

Before consolidation, revenues from the radio frequency/microwave/millimeter wave and antenna manufacturing business amounted to $12.2 million, 53 percent higher than the level in the same period last year. After elimination of intercompany sales during consolidation, revenues to external customers amounted to $1.8 million while profit after income tax amounted to $1.8 million.

Revenues from the semiconductor business rose by 6 percent year-on-year to $9.4 million in the first quarter. Profit after tax amounted to $754,000.

Moving forward, Cirtek is upbeat on its antenna business under Quintel, noting that the macro base station antenna business offers a $4-billion market.

In the US market where Quintel currently operates, new antenna demand is estimated at between 300,000 to 500,000 per year over the next few years.

For 2018, Cirtek expects to increase its sales to AT&T and Verizon by at least 60 percent. The company is also looking to complement its in-house product research and development (R&D) with strategic acquisitions and technology collaboration with third parties.

On the other hand, demand for high-frequency, millimeter wave products are seen to grow by at least 30 percent annually, driven by the need to deploy new services such as LTE (in emerging markets), 5G new ratio in the future (in leading markets), and reallotment of spectrum bands.

Cirtek, through Wireless Solutions subsidiary, has deployed over 1.5 million radio products worldwide. The company is aggressively pursuing new customers as demand for microwave and millimeter wave systems in the upper frequencies increase.

The semiconductor industry is forecast to grow between 5 percent to 7 percent for the next three years. In terms of applications, sensors/ micro-electro-mechanical systems are seen to grow at the fastest pace.

In terms of market, wireless communication, the internet of Things (IoT), big data, and automotive are seen to be the major growth drivers.

For its part, Cirtek expects its semiconductor business to grow at the higher end of the industry’s growth forecast.

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