The company, Cirtek Holdings Philippines Corporation (TECH), has remained to be profitable nine-months into the year. Although, it can be noted that TECH’s profitability has been slowed by -2% year-on-year (y/y) to $3.62 million despite high expectations towards the global semiconductor market as its topline for the 9-month 2020 (9M20) period declined by -14% y/y to $59.52 million. With this, recovery from prior year’s trade tensions and global components shortage will be prolonged.

Nonetheless, forward looking, TECH should be able to recover smoothly as it was able to recently bag deals in the U.S market. In line with this, we expect the company’s port antennas, discrete semiconductors, integrated chips, and microwaves to get a boost from the signed agreements. Moreover, the 5G roll-out across the globe could also give TECH a steady lift on its profitability.

Recommendation

Given that TECH is expected to ride the boom of both the Internet of Things as well as global 5G rollouts in the following years, coupled with the current stock price action, we upgrade our recommendation to a BUY and revise the Fair Value to P10.00 per share to factor in the pandemic impacts.

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