By Lourdes O. Pilar, Researcher
INVESTORS took profit on International Container Terminal Services, Inc. (ICTSI) last week following the risks posed by Russia’s invasion of Ukraine as well as the renewed lockdowns in China to its performance this year.
Data from the Philippine Stock Exchange (PSE) showed a total of 5.08 million ICTSI shares worth P1.15 billion exchanged hands from April 18 to 22, making it the eighth most actively traded stock last week.
The share price of the Enrique K. Razon, Jr.-led port operator finished at P225.00 apiece on Friday, up by 2.1% from a week ago. The stock has increased 15.4% since the start of the year.
“ICTSI felt the impact of the war starting February of this year, but they don’t have any business in Ukraine or Russia,” Mercantile Securities Corp. Analyst Jeff Radley C. See said in a Viber message.
“Similar to the pandemic, the war will bring congestions in many terminals around the world,” he added.
Although ICTSI does not have port operation in Ukraine or Russia, “its port operation could still be affected by trade disruptions and rising commodity prices,” COL Financial Group, Inc. Research Analyst Adrian Alexander N. Yu in an e-mail.
Meanwhile, Regina Capital Development Corp. Equity Analyst Arielle Anne D. Santos said the renewed lockdowns in China placed heavyweight issues like ICTSI into the spotlight last week.
“My thinking is that the market expects that the operations of ICTSI will be affected by such mobility restrictions, causing the stock to become volatile. Others used this volatility as an opportunity to make quick profits on the stock,” she said in an e-mail interview.
Mr. Razon said during the ICTSI’s annual stockholders’ meeting last week that he is confident regarding the company’s outlook but noted the impact of China’s renewed lockdown policy to contain the surge of coronavirus disease 2019 (COVID-19).
He also noted that they are about to start seeing the effects of Russia-Ukraine war, which started in late February that sent oil benchmarks surging past $100 a barrel for the first time in many years.
In a Bloomberg report, Shanghai’s lockdown has caused congestion at the world’s largest port, with queues of vessels building there and at other stops handling diverted shipments.
A shortage of port workers in Shanghai is slowing the delivery of documentation needed for ships to unload cargoes, according to ship owners and traders.
ICTSI’s gross revenues rose by almost a fourth to $1.93 billion last year from $1.55 billion in 2020.
Meanwhile, its attributable net income jumped more than fourfold to $428.57 million last year from $101.76 million previously.
For this year, it has budgeted approximately $330 million in capital expenditures, the bulk of which will be used for expansion projects and 13% for maintenance.
There will be overall risk aversion globally toward equities, but ICTSI will be relatively more defensive due to the diversified nature of its operation, said Mr. Yu.
“We project revenues to grow by 4% in 2022, as throughout is expected to continue to grow despite the Russia-Ukraine crisis. Meanwhile, we project earnings per share to grow by 15% for 2022 brought about by higher EBITDA (earnings before interest, taxes, depreciation, and amortization) margins,” said Mr. Yu.
Ms. Santos noted that Europe, Middle East, and Africa segments, which contribute 23% on average to ICTSI’s top line, are expected to be affected with the ongoing war between Russia and Ukraine.
“Factoring in the influence of the war in Ukraine, the mentioned segments would probably contribute in the mid- to high teens, but not anywhere close/lower to 10%,” she said.
“For this year, we expect ICTSI’s topline to post double-digit growth, roughly around 15% year on year,” Ms. Santos added.
Ms. Santos expects it to become range-bound again next week as it failed to close above its resistance at P225 on Friday.
She gave ICTSI a support of P220.00 per share and a resistance of P225.00 per share this week.
Mr. Yu, for his part, sees ICTSI to trade this week with support and resistance levels at P215 and P230, respectively.
Ms. See expects the company to trade sideways this week, with support levels at P220.40 and P210.60 and resistance levels at P230 and P236.60. — with inputs from Bloomberg
