Cirtek plans new P2-B CP issuance

Cirtek Holdings Philippines Corporation (CHPC) is planning to raise P2 billion from a new issuance of commercial papers.     In relation to this, Philippine Rating Services Corporation (PhilRatings) has assigned an Issuer Credit Rating of PRS A (corp.), with a Stable Outlook, for the company.     A company rated PRS A (corp.) has an above average capacity to meet its financial commitments relative to that of other Philippine corporates. The company, however, is somewhat more susceptible to adverse changes in circumstances and economic conditions than higher-rated corporates. On the other hand, a Stable Outlook means the rating is likely to be maintained in the next twelve months.     PhilRatings said the rating and Outlook were assigned took into consideration the Cirtek Group’s 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.     It also noted CHPC’s strong customer base of well-established global companies, and which is diversified in terms of regions and industries and its conservative capital structure.     Although the long-term outlook is positive at present, PhilRatings said the industry is highly competitive, cyclical, and is susceptible to adverse changes in various economies, and is characterized by the presence of larger international players.     Also factored into the rating is that Cirtek’s earnings surpassed pre-pandemic levels supported by the steady recovery in revenues, although CHPC continues to face challenges in receivables collection.     CHPC has been offering its products and services to several customers in the U.S., Asia and Europe, with a 48 percent, 35 percent and 17 percent revenue contribution as of the first nine month of 2022, respectively.     Such exposes CHPC to diversified risks relating to the performance of the economies where these customers are based, particularly with the impact brought about by the COVID-19 pandemic, supply chain disruptions, and geopolitical tensions.     The semiconductor industry is highly competitive and cyclical in nature, with the Company operating in a market with larger international players. It is likewise affected by various factors in international trade and the performance of several large economies.     On a positive note, global semiconductor industry sales totaled $574.1 billion in 2022, the highest annual total and an increase of 3.3 percent compared to $555.9 billion in 2021. Sales, however, slowed down during the second half of the year.