Investors Reflect on ICTSI Unit and Pampanga Logistics Company

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SHARES in Razon-led International Container Terminal Services, Inc. (ICTSI) moved sideways last week as investors assessed its subsidiary’s partnership deal with Pampanga-based Prime Alta Holdings, Inc. to form a freight forwarding and logistics company.

Data from the Philippine Stock Exchange (PSE) showed ICTSI ranked seventh in terms of turnover by value with 816.76 million pula out of 4.48 million shares trading hands on the market. floor from September 5 to 9.

ICTSI shares closed at P184.30 each on Friday, up 0.7% from its September 2 close. For the year, the stock fell 5.5%.

“ICTSI moved sideways during the week as investors digested news of its new joint venture with Prime Alta Holdings, Inc. and the sharp drop in Asia-US shipping rates,” Inzaghi Rafael D said. Cabacungan, research analyst at RCBC Securities, Inc. an email.

“Shipping rates have come down due to the slowdown in global trade due to lower demand for goods,” he added.

In a separate email, Joylin F. Telagen, Head of Research at IB Gimenez Research Securities, Inc., said ICTSI was consolidating at this price level which closed this week at P184.30 each.

“Investors are on the sidelines [last] the week. However, this joint venture news will fundamentally improve the company’s long-term results. But I think traders are waiting for a technical breakout before redemption,” Ms. Telagen said.

For Mr. Cabacungan, the joint venture is beneficial for the port operator.

“We are still awaiting new information to assess the impact on the stock’s earnings,” he added.

Last week, the port operator led by Enrique K. Razon, Jr. saw developments that include ICTSI subsidiary Abbotsford Holdings, Inc. signing a partnership agreement with Prime Alta Holdings, Inc. to implement sets up a forwarding and logistics activity.

The joint venture is to be called Fortune Logistics Corp., which aims “to reduce costs and improve operational efficiencies associated with the processing of goods for use by ICTSI for its various operations in the Philippines,” as noted in a statement. communicated. stock Exchange.

Fortune Logistics will primarily operate, engage in and engage in domestic and international ocean, air and land freight forwarding and logistics business.

Both companies expect regulators to issue permits and licenses within one to two months of signing the shareholders’ agreement for the joint venture.

The deal has an initial capitalization of 25 million pesos, where Abbotsford will invest an initial subscription of 12.75 million pesos or holding 51%, while Prime Alta will invest 12.25 million pesos, holding 49%.

ICTSI said that this joint venture will distribute a percentage of its distributable free cash flow and that these dividends will be paid to shareholders in proportion to their respective shareholdings.

Based on a report in PortCalls, the Freightos Baltic Global Index, East Coast Asian and US prices fell 4% to $8,688 per forty foot equivalent unit in the week. last year and were 61% lower than last year.

“The decline reflects lower demand for freight, both due to excess inventory at some importers, with inflation reducing spending by some consumers and others shifting to other types of goods and services as as the pandemic recedes, and because many retailers withdrew peak season orders earlier in the year to avoid delays,” Freightos said.

ICTSI recorded a 42.3% increase in net income attributable to $152.200 million in the second quarter, compared to $106.592 million in the same period of 2021.

This brought its attributable net profit for the first half of the year to $294.475 million, up 49.7% from $196.662 million a year ago.

Similarly, gross revenue from port operations in the second quarter rose 19.5% to $534.642 million from $447.037 million in the same period last year.

In the first half, revenue from port operations rose 20.4% to $1.063 billion from $882.624 billion previously.

“With the impressive ICTSI [first-half] performance thanks to improved volumes due to the easing of COVID-19 restrictions and additional terminals, its first-half profits are already 63% of our full-year 2022 guidance at 25.9 billion pesos,” Mr. Cabacungan said.

“It could exceed our predictions,” he said. “However, it could face headwinds as a possible recession in the United States could lead to a slowdown in global trade.”

ICTSI has a diverse portfolio of ports around the world, including Europe, the Middle East, Africa, Asia-Pacific and Americas.

Ms Telagen forecasts third-quarter profit of $155.62 million, while net profit attributable to parent company shareholders of $600 million for the full year.

“At this point, with possible risk of stagflation and days away from the Fed meeting this month, I think it’s best to sit on the sidelines and wait for a technical breakout,” she said. .

She noted that market participants should trade and invest cautiously.

“As ICTSI continues to trade sideways near its 52-week low at P168.50, immediate resistance is at P190.00 while support is at P80.00,” Cabacungan said.

Meanwhile, Ms. Telagen set support and resistance levels at P173.00 and P194, respectively. — Abigail Marie P. Yraola

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