By Pierce Oel A. Montalvo, Researcher
SHARES of International Container Terminal Services, Inc. (ICTSI) climbed last week after it secured a 25-year concession to operate South Africa’s busiest state-owned port terminal, lifting trading activity and reinforcing investor confidence in its overseas expansion strategy.
ICTSI was the second-most actively traded stock, according to Philippine Stock Exchange (PSE) data, with 6.23 million shares worth P3.74 billion changing hands during the week. The stock rose 3.9% to P610, outperforming both the service sector’s 1.4% gain and the Philippine Stock Exchange index’s (PSEi) 1.5% rise.
The stock has surged 58% from its P386 close on the last trading day of 2024, far ahead of the service sector’s 20.7% increase and the PSEi’s 7.5% decline. Trading was paused on Monday due to the Feast of the Immaculate Conception holiday.
The rally came after South Africa’s Transnet SOC Ltd. signed a 25-year agreement on Thursday giving ICTSI the right to upgrade and operate the Durban Container Terminal Pier 2 (DCT2), the biggest facility in Transnet’s port system. DCT2 handles more than 70% of the Port of Durban’s throughput and about 46% of South Africa’s entire port activity.
The terminal includes 1,760 meters of quay length and 120 hectares of yard and support areas. Under the deal, ICTSI will expand DCT2’s handling capacity to 2.8 million twenty-foot equivalent units (TEUs), or 800,000 TEUs more than its volume now, through equipment and modernization works. Project rollout is expected to start in January 2026.
Michael Adrian O. Vergara, head of equities and global funds at Sun Life Investment Management and Trust Corp., said initial returns from the project might be modest but should improve steadily once operations stabilize.
“We take the view that return on invested capital (ROIC) is likely to be minimal at first, but will ramp up after the third year to low-teen ROIC,” he said in an e-mailed reply to questions. He noted that execution risks remain, including operational integration, timeline management and coordination with Transnet, labor groups and other local stakeholders.
Transnet has a history of disputes with labor unions, including the United National Transport Union (UNTU) and the South African Transport and Allied Workers Union.
“Transnet managed to sign a settlement agreement with UNTU that has specific clauses related to job security and nonretrenchment,” Mr. Vergara said. “ICTSI will have to deal with similar labor union initiatives as it scales up and tries to make DCT2 more efficient.”
Jash Matthew M. Baylon, an equity analyst at First Resources Management and Securities Corp., noted that while ICTSI’s involvement could improve port efficiency, political and regulatory risks loom.
“Sustained policy uncertainty and internal resistance to privatization reforms within the state-owned sector could complicate the long-term execution of the partnership,” he said.
Both analysts said global monetary easing, including synchronized 25-basis-point rate cuts by the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP), is likely to support market sentiment for ICTSI.
The BSP lowered its benchmark rate on Thursday to 4.5%, the lowest in three years, after cutting 200 basis points since it began easing in August 2024.
“Overall, there seems to be a consensus to stay overweight on ICTSI over other Philippine names due to its international business exposure, which has so far provided a buffer from concerns about the weakening peso and domestic sentiment,” Mr. Vergara said.
He added that further expansion at the Manila International Container Terminal beyond Berth 8 remains a growth driver, though possible negotiations for higher concession fees with the Philippine Ports Authority present a risk.
ICTSI’s net income attributable to equity holders rose 26.3% to $267.72 billion in the third quarter from a year earlier, pushing nine-month net income higher by 18.8% to $751.56 billion. Revenue rose 19.7% to $827.74 billion, bringing the nine-month revenue to $2.34 trillion, up 16.1%.
“We expect full-year 2025 earnings-per-share growth of about 22% year on year to $0.487 and more modest 12% growth to $0.545 in 2026,” Mr. Vergara said.
Mr. Baylon places the stock’s support level at P540-P550 and resistance at P650-P670.
Mr. Vergara sees support at P550. “Resistance is harder to gauge as the stock trades close to all-time highs,” he said, citing a Bloomberg consensus target price of P626.
