Increased China trade seen lifting ICTSI growth
PORT operator International Container Terminal Services Inc. (ICTSI) will likely deliver stronger organic volume growth this year on expectations of higher trade from China, Maybank Investment Banking Group said Friday.
In a report, Maybank said the anticipated increase in China trade would likely boost volumes at the Manila International Container Terminal (MICT) and Victoria International Container Terminal Ltd., both managed by ICTSI.
The Razon-led company posted a 1.0-percent organic volume growth — or growth achieved through internally generated sales and increased output — in the first nine months of 2023, resulting in a 5.0-percent rise in organic revenue.
Maybank said that Asia and the Americas — which accounted for 80 percent of ICTSI’s total volume during the period — saw year-on-year volume growth of 12 percent and 5.0 percent, respectively.
As of end-September of last year, the port operator handled a consolidated volume of about 9.45 million twenty-foot equivalent units (TEUs), 7.0 percent higher compared to the 8.86 million TEUs recorded a year earlier.
Maybank also raised its earnings forecast for ICTSI by 4.6 percent for this year on the back of lower operating expense estimates and higher expected tariffs for MICT, in addition to the anticipated organic volume growth.
“MICT is already due for a tariff increase this year, stoked by the high cumulative inflation of the past three years,” the investment bank said.
In May 2022, ICTSI announced a new tariff table reflecting the Philippine Ports Authority’s approved 8.0-percent upward tariff adjustments on vessel and cargo-handling charges.
Meanwhile, the company’s equity income will likely get a substantial boost once a deal to operate and further develop Durban Container Terminal (DCT) Pier 2 in South Africa is completed this year, Maybank said, as the “port is already profitable.”
“As ICTSI is still in negotiations with DCT, it doesn’t expect the deal to be completed until April 2024. As we are expecting some delays, we forecast the deal to be completed by the second half of 2024,” it added.
ICTSI said last July that it had been chosen as the preferred bidder for the 25-year joint venture with Transnet Port Terminals to privatize DCT Pier 2, Transnet’s biggest container terminal.
The earlier-than-expected closing of the joint venture deal, along with strategic acquisitions in emerging markets and elevated efficiency at existing terminals, were expected to fuel the port operator’s growth.
On the other hand, economic and political instability in the markets where it operates, as well as foreign-exchange translation risks, will likely temper ICTSI’s income improvements, Maybank added.
On Friday, ICTSI’s share price fell by P8.60, or 3.47 percent, to P239.20 amid a 0.11-percent downturn for the benchmark Philippine Stock Exchange index.