SHARES in Razon-led International Container Terminal Services, Inc. (ICTSI) inched down last week after the results of the central bank’s hawkish pause for a fourth straight meeting and the US Federal Reserve’s decision to keep rates steady.
Data from the Philippine Stock Exchange (PSE) showed the port operator ranking 15th in value turnover with P407.42 million worth of 1.99 million shares exchanging hands from Sept. 18 to 22.
ICTSI shares closed at P203.80 apiece on Friday, inching down by 0.6% from its P205.00 close on Sept. 15. Year to date, the stock slightly rose by 1.9%.
Rastine Mackie D. Mercado, research director at China Bank Securities Corp., said that the general market conditions last week were largely driven by the US Fed and Bangko Sentral ng Pilipinas’ (BSP) policy meetings.
“Market reaction to both central banks’ reiteration of their hawkish policy stances is not only particular to [ICTSI] but to other industries as well,” he said in an e-mail.
For John Louise L. Resurreccion, equity analyst at Regina Capital Development Corp., the stock market last week saw the index dropping to 6,000 levels, causing most of the Index names to be highly volatile and bearish.
“This caused prices to suddenly fall in a downward trend but for [ICTSI], we can see that it was moving in a range from [P200.00 to P211.00] so it’s a little more resilient in terms of price movement as compared to other index name,” he said in an e-mail.
Last week, the US Federal Reserve held interest rates steady but stiffened a hawkish monetary policy stance that its officials believe can lower inflation without wrecking the economy or leading to large job losses, Reuters reported.
The report added that the US central bank’s benchmark overnight interest rate may still be lifted one more time this year to a peak 5.5%-5.75% range.
Mirroring the stance, the BSP kept its key interest rate at 6.25% but signaled it is possible to resume policy tightening at its next meeting if inflation continues to persist.
The overnight deposit facility rate was kept at 5.75% while the lending facility rate was maintained at 6.75%.
Last week, developments included ICTSI’s plan to utilize digital solutions and extend the availability of its “ICTSI App” to other terminals in the group.
Launched in 2022, the app allows customers to track their cargo in various ports. Customers can track their shipments, allowing them to streamline their operations and potentially reduce logistical expenses.
In another report, the listed port operator said it is planning to finish its port expansion in Melbourne, Australia this year after the arrival of two new quay cranes from China.
Victoria International Container Terminal (VICT), ICTSI’s subsidiary, said the cranes are part of its 235-million Australian dollar expansion investment that will boost its capacity by up to 1.25 million twenty-foot equivalent units (TEUs).
To date, ICTSI invested around one billion Australian dollars in its Melbourne operations.
VICT’s supersized ship, M/V CMA CGM Pelleas, has docked in its Melbourne port. The container vessel, which has a carrying capacity of about 10,000 TEUs, is 350 meters in length and 43 meters wide.
These developments may not be a big catalyst, said Mr. Resurreccion, but will affect ICTSI’s earnings as its services become more accessible to its clients.
“What most likely will happen is ICTSI will keep reacting to the PSEI’s movement where if it falls, ICTSI will probably move in a range or fall if prices do not hold,” Mr. Resurreccion said.
On the other hand, he said that if the index recovers, ICTSI will surely benefit, with its stock price picking up.
For Mr. Mercado, the news will be taken positively by the market as further development and wider adoption of the app could strengthen demand for their services.
As for the port expansion in Australia, this should bode well for volumes, he said.
“However, we think investors are likely to focus more on global macro developments to assess how trade activities would trend moving forward,” he added.
In the second quarter, ICTSI’s attributable net income grew by 4.6% to reach $159.19 million, while total revenues rose by 13.5% to $628.47 million.
In the first semester, earnings increased by 6.6% to $313.80 million as consolidated revenues grew by 11.1% to $1.22 billion.
For Mr. Mercado, ICTSI’s full-year 2023 attributable net income could amount to $634 million.
For Mr. Resurreccion, ICTSI will continue to perform positively as it continues to expand its operations by securing new concessions and improving existing ports.
“Improving macroeconomic factors will also be beneficial for the company as this makes global trade more active which will lead to more volume in TEUs handled,” he added.
He also said that the port operator is fundamentally good and its price movement is also resilient compared with other index names during times of market downturns.
Mr. Resurreccion placed his support and resistance levels for the port operator at P203 to P208 “given that it was the previous range where prices moved around in the last few weeks.”
Meanwhile, Mr. Mercado said attractive points for ICTSI include its expansion prospects, such as the Durban terminal in South Africa, the outlook for stable yields given that some terminals are due for tariff adjustments this year, and the track record of dividend payments, which have been increasing over the past years.
He pegged support and resistance levels at P200 and P216, respectively. — Abigail Marie Pelea Yraola