Cirtek shares up sharply after listing debut

CHIP MAKER Cirtek Holdings Philippines Corp. enjoyed a favorable reception at its listing debut on Friday, with share prices rising by 13.57% at close of its first trading day.

Shares closed at P7.95 apiece versus the P7 offer price, bucking the lackluster results seen by the two other firms that conducted public offerings this year.

PSE entrant Megawide Construction Corp. ended flat at P7.84 apiece on its first trading day in February while Puregold Price Club, Inc. shares slumped by 12% to P11 last month.

“So far we are quite pleased with the initial trading activities in the PSE floor. I believe the investing public are intelligent and they know what to choose and what stock to invest,” said Cirtek Chairman and President Jerry Liu after the company listed 42.16 million new common shares following an offer period lasting from Nov. 8 to 14.

Earlier this week, the company said its P295.14-million initial public offering (IPO), underwritten by Unicapital, Inc., was oversubscribed by over four times.

In contrast, volatile market conditions had been reported to have scared off several interested firms from listing on the bourse or undertaking secondary offerings.

Property developers Phinma Property Holdings, Corp., ACM Landholdings, Inc., and DMCI Project Developers, Inc. have deferred their respective IPOs as did SMC Global Power Holdings Corp. which had been looking to sell $850 million worth of shares.

“There was significant unserved demand during the offer period, so investors wanting to buy Cirtek shares did so over the exchange. Also, the IPO price allowed for significant upsides for investors. These factors have likely contributed to a strong first-day performance,” said Cirtek Chief Financial Officer Anthony A. Buyawe in a text message on Friday.

Mr. Buyawe also noted the company’s good fundamentals such as growing sales, a proven track record of profitability, consistent annual dividend payout, as well as diverse and customer-specific packages.

Moreover, the company said it was not revising its earlier profit targets despite economic pessimism abroad.

“We did initially indicate a $4-million full year target income, and we are still in line to meet that. We are not downgrading our forecast for 2011 even if semiconductor exports are weak,” Mr. Buyawe said in a press briefing on Friday, referring to the projected 11.1% hike in net income from $3.6 million in 2010.

A 20%-25% organic growth in net income was also possible for next year, excluding possible acquisitions and joint ventures. “We are targeting at least $50 million in revenues and a net income of $5 million,” he added.

Next year’s growth will be driven by new investments in “green” sensing technology that cuts consumption costs and is largely supported by semiconductor chips.

The company will embark on a three-year expansion program to increase its business and expand its customer base, and is using the IPO proceeds to partly bankroll the effort. This includes the construction of a 55,000-square meter manufacturing facility in Binan, Laguna, which will add 180,000 square feet of manufacturing space.

Cirtek registered with the Securities and Exchange Commission in 1984 as an independent subcontractor for semiconductor assembly, test, and packaging services, and was organized as a corporation in February this year.

The company’s shares outperformed the bellwether PSE index on Friday, which dipped by 0.74% or 32.23 points, closing at 4,302.43. The broader all-share index was similarly down by 0.34% or 10.25 points to 3,013.24.