Electronics firm readies stock buyback program

Laguna-based electronics manufacturer Cirtek Holdings Philippines Corp. has unveiled a stock buyback program, citing its goal of improving returns to shareholders.

“Returns to shareholders is one of Cirtek’s key objectives,” Cirtek chair and president Roberto Juanchito Dispo said in a recent statement.

Cirtek will carefully consider the timing and method of the share repurchases, but it aims to carry them out as soon as possible, Dispo said.

Buying a company’s own shares from the stock market, for as long as this company has sufficient retained earnings, is deemed as a way to perk up shares when management thinks the shares are undervalued.

Cirtek expects to breach the $100-million revenue mark and post a net profit of at least $14 million this full year, buoyed by the turnaround into profitability of newly acquired antenna solutions provider Quintel.

In the first semester, Cirtek grew its net profit by 60 percent year-on-year to $7.5 million while consolidated revenue rose by 30 percent year-on-year to $54.8 million.

The guidance for the third quarter is to hit consolidated sales of $26 million to $38 million, supported by a strong sales pipeline, cost rationalization and launch of new products for volume release and field trials.

Margins are seen to improve particularly for Quintel, whose operations are now being restructured to further unlock gains from the acquisition of this company, which became the group’s ticket to Silicon Valley.

Revenue contribution from Quintel in the first semester amounted to $30.7 million. For the same period, Quintel registered a net profit of $1.8 million. Quintel’s turnaround in the second quarter is in line with management’s expectation and market guidance.

In the US market where Quintel currently operates, new antenna demand is estimated at between 300,000 and 500,000 per year over the next few years. Quintel currently serves US mobile giants AT&T and Verizon but talks are underway to likewise serve other major players such as T-Mobile and Sprint.

Revenues from the radio frequency/microwave/millimeter and antenna manufacturing business before consolidation for the six-month period amounted to $29.4 million, marking a 42-percent increase from the level in the same period in 2017. After eliminating intercompany sales during consolidation, revenues from external customers amounted to $3.7 million. Profit after income tax amounted to $4.8 million.

Six-month revenue from the semiconductor business amounted to $20.5 million, down by 5 percent from the same period last year. However, profit after tax amounted to $884,000, 17 percent higher year-on-year.

Group-wide, gross margin rose to 28 percent in the first semester, compared to 19 percent in the same period last year. —DORIS DUMLAO-ABADILLA