{"id":327061,"date":"2024-03-07T01:38:55","date_gmt":"2024-03-06T17:38:55","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=327061"},"modified":"2024-03-07T01:44:06","modified_gmt":"2024-03-06T17:44:06","slug":"stock-in-focus-international-container-terminal-services-inc-ict-7-march-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-international-container-terminal-services-inc-ict-7-march-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: International Container Terminal Services Inc. (ICT) – 7 March 2024 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>ICT<\/td><\/tr>
Company Name<\/strong><\/td>International Container Terminal Services Inc.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>7 March 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 281.20<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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Currents still drifting towards growth, recommend HOLD. ICT\u2019s CAPEX budget for 2024 is 33.9% higher than its actual capital expenditure from last year. Much of this will be allocated towards expansionary investments in ports such as MICT (Manila), VICT (Australia), and the new Iloilo port. Additionally, management also cited the strong possibility for double-digit tariff increases in several of its ports across the globe. <\/p>\n\n\n\n

Given that current upside is limited though, we would recommend a HOLD although we remain positive on the company’s long-term fundamentals.<\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

Core earnings light the way<\/h3>\n\n\n\n

The steep drop in ICT\u2019s bottomline stemmed mainly from one-off impairments pertaining to a.) a writeoff on the goodwill of its Pakistan concession amounting to USD10.6-Million, and b.) booked losses worth USD154.7-Million connected to the failed turnover of the Port of Sudan by the Sudanese government. Upon excluding these items however, recurring profits come in at USD676.8-Million (+7% YoY),
outperforming analysts\u2019 estimates by 9.2%. <\/p>\n\n\n\n

Volumes weather choppy waters <\/h3>\n\n\n\n

Amidst the challenging global trade environment, systemwide container volumes still managed to reach 12.75-Mn TEUs, up by 4.4% versus a year ago. While operations in certain ports in Davao and Indonesia were discontinued, the consolidation of Manila North Harbor Port (MNHPI) more than made up for these and allowed Asia to remain the fastest growing segment at 7.2% (6.57-Mn TEUs). EMEA meanwhile saw a 5.0% contraction in volumes to 2.53-Mn TEUs due mainly to the expiration of the Pakistan concession.<\/p>\n\n\n\n

Operating expenses are an area for improvement<\/h3>\n\n\n\n

Expansion in operating costs (+8.3%) outweighed the growth in volumes, presumably due to the inflationary environment. We note that cash OPEX-per-TEU was up by 3.7% to USD51.98. The bulk or almost 50.0% of total Cash OPEX (amounting to USD662.7-Mn) was manpower related (USD329.1-Mn), with the latter seeing a 9.8% rate of growth. In the coming quarters, management intends to focus on curtailing any further momentum in this department. Thankfully however, authorities\u2019 share in port revenues was flat in 2023 at USD220.0-Mn (-0.7%). This helped to offset the aforementioned OPEX drivers and allowed EBITDA to climb by 7.0% to USD1.5-Bn at a 63.0% margin (unchanged YoY).<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>