ICTSI expansion turns investors bullish

EXPANSION plans of the company and optimism on global trade amid vaccine trials attracted market players to trade shares of International Container Terminal Service, Inc. (ICTSI).

Data from the Philippine Stock Exchange showed a total of 10.16 million ICTSI shares worth P1.2 billion were traded last week, making it the fourth most actively traded stock in the local bourse.

The Razon-led company finished 2.1% higher week on week to P118 apiece on Friday. Year to date, ICTSI fell 9.2%.

“International Container Terminal Service, Inc.’s share has been riding on an upward momentum after bottoming at P66.05 last March 24, 2020,” Philstocks Financial, Inc. Senior Research Analyst and Officer-in-Charge Japhet Louis O. Tantiangco said in an e-mail.

Mr. Tantiangco said developments such as the start of commercial operations of its subsidiary Kribi Multipurpose Terminal in Cameroon and the $18 million investment in the Port of Guayaquil in Ecuador through its subsidiary Contecon Guayaquil S.A. are seen to be beneficial to its operations.

The listed company disclosed earlier this month that it opened a terminal in Central Africa, which can provide multipurpose shipping line services and support services to the oil and gas industry.

Meanwhile, its operations in Latin America are seen to expand with ICTSI’s subsidiary in Ecuador investing $18 million to boost the capacity of the Port of Guayaquil in accommodating larger vessels. The port operator said on Wednesday it also plans to increase the total investment to $30 million “to promote Ecuador’s foreign trade.”

Mercantile Securities Corp. Analyst Jeff Radley C. See said the local market had been bullish in response to the additional investment.

“The price shot up beyond its resistance of P110,” Mr. See said in a separate e-mail.

“Hearing news about countries pouring resources to fasten the development of a vaccine has pushed ICTSI upward. Investors are anticipating that the virus [spread] will slowly die down and more countries will open,” he added.

As of Oct. 18, more than 39 million individuals contracted the coronavirus disease 2019 with around 1.1 million deaths linked to the virus. Several pharmaceutical companies have been conducting clinical trials for a possible vaccine against the disease.

“The company’s fundamentals are challenged by the pandemic and its resulting restrictive measures implemented around the world that have slowed global trade down. This is seen in their first-half financial results with revenues from port operations declining 3.7% year on year and net income contracting 10.1% year on year,” Philstocks Financial’s Mr. Tantiangco said.

ICTSI recorded a $724.26 million gross revenue and a $131.31 million net income in the first six months of the year. Moreover, its net income attributable to the parent decreased 11.7% to $113.38 million during the same period.

“Moving forward, the reopening of the economies around the world could ease the pressure on ICTSI’s financial performance for the remainder of the year. Risk to the company is a reimplementation of global restrictions,” Mr. Tantiangco said.

Mercantile Securities’ Mr. See expects ICTSI consolidating between P112 and P120 for now. “Resistance levels will be at P126 and P135, while support levels will be at P115 and P110,” he said.

For Mr. Tantiangco, support range is from P102 to P105, and resistance between P118 and P120.

“If ICTSI is able to break above and sustain ground at its current resistance, next resistance seen for ICTSI is at P135.00,” he said.