Philippine equity research for International Containers Terminal Inc.
SHARE DATAABSOLUTE PERFORMANCEMARKET DATAInternational Container
Terminals Inc:1H15 core earnings in line with COL forecastRevenues
slightly missed estimates due to Portland, Poland and currency
devaluation.
1H15revenuesrose8.2%toUS$552.1MIl,slightlymissingourestimate,representing48.8%
of our full year forecast.Container volume grew by 9% to 3.88Mil
TEU, representing only 46%
ofourfullyearforecast.ThiswasmainlyduetothestrongperformanceoffagshipManila
International Container Terminal (MICT), Yantai terminal in
China,the continuous ramp up of the ports in Mexico and Honduras,
and the frst full year contribution of Iraq.However, container
volume still fell short of estimates due to the sharp decline in
the volume of the port in Portland due to the ongoing labor
dispute.ICTs port in Poland also suffered a decline in volume due
to weakness in trade, while revenues from ICTs ports in Brazil and
Madagascar were dragged down by the devaluation of the Real and
Euro.EBITDAslightlybelowforecastduetorevenues.Cashoperatingproftsasmeasuredby
EBITDAgrew11.9%in1H15toUS$237.4Mil,equivalentto48.5%ofourfullyearforecast.
EBITDA slightly missed our estimate due to lower than expected
revenues.Meanwhile, the rise
inICTscashoperatingexpenseswasbelowestimates,increasingby2.5%toUS$226.5Mil,
representing 48% of our full year forecast.EBITDA margin improved
100 basis points to 43.0%, in line with our
forecast.Excludingone-offitems,1H15rose19.8%toUS$102Mil,representing51.8%and54.9%ofCOL
and consensus forecast. Earnings met our forecast as interest and
depreciation expenses during 1H15 were lower than expected.Revenues
were slightly below COL estimate, with 1H15 gross port revenues up
8.2% to US$552.1Mil or 48.8% of our full year forecast.Cash
operating expenses were below estimates, increasing by 2.5% to
US$226.5Mil, representing 48% of our full year forecast.Rating
HOLDTicker ICTFair Value (Php) 110.60Current Price 108.50Upside (%)
1.941M 3M YTDICT -1.72 -0.46 -5.65PSEi 1.92 -2.95 4.20Market Cap
219,800.15MilOutstanding Shares 2,025.81Mil52 Wk Range 102.60 -
119.503Mo Ave Daily T/O 121.20MIlGeorge
[email protected] PRICE MOVEMENTYear to Dec.
31 2011E 2012 2013 2014 2015E 2016ESales 664.8 729.3 852.4 1,061.2
1,131.6 1,260.2% change y/y 26.1 9.7 16.9 24.5 6.6 11.4EBIT 212.5
226.8 277.8 321.3 353.9 396.1% change y/y 17.5 6.7 22.5 15.7 10.1
11.9EBIT Margin (%) 32.0 31.1 32.6 30.3 31.3 31.4EBITDA 281.4 307.1
377.3 443.0 489.5 553.4% change y/y 13.6 9.2 22.9 17.4 10.5
13.1EBITDA Margin (%) 42.3 42.1 44.3 41.7 43.3 43.9Net Profits
130.5 143.5 172.4 182.0 197.0 227.6% change y/y 32.8 10.0 20.1 5.6
8.2 15.5NPM (%) 19.6 19.7 20.2 17.2 17.4 18.1EPS (cents) 0.063
0.060 0.074 0.079 0.097 0.112% change y/y 30.7 -5.4 23.7 6.4 23.1
15.5RELATIVE VALUEP/E(X) 39.8 42.1 34.0 32.0 25.9 22.5P/BV(X) 5.7
4.5 4.0 3.6 3.2 2.8ROE(%) 13.9 12.0 12.7 12.4 11.6 11.8BVPS(P) 0.5
0.6 0.7 0.7 0.8 1.0Dividend yield(%) 0.4 0.6 0.6 0.8 0.8
0.8*Source: COL est imat esFORECAST SUMMARYTUESDAY, 11 AUGUST
2015809010011011-May-15 11-Jun-15 11-Jul-15 11-Aug-15ICT PSEiP HI L
I P P I NE E QUI T Y R E S E A R C HTUESDAY, 11 AUGUST 2015page
2ICT I EARNINGS ANALYSIS1H15 core earnings in line with COL
forecast on lower than expected interest and depreciation ICTs 2Q15
net income declined 5.9% y/y to US$46.4Mil, bringing 1H15 net
income to US$100.4Mil, down 1.3% y/y.However, last years earnings
included US$16.6Mil of one-off gains, vs 1H15s one-off expenses of
US$1.6Mil.Excluding one-off items, 1H15 rose 19.8% to US$102Mil,
representing 51.8% and 54.9% of COL and consensus forecast. Core
income was in line with COL forecast, but higher than consensus
forecast.Revenues were slightly below COL estimate, with 1H15 gross
port revenues up 8.2% to US$552.1Mil or 48.8% of our full year
forecast.Earnings met our forecast as interest and depreciation
expenses during 1H15 were lower than expected.Interest expense rose
1.3% to US$27.8Mil, representing only 45% of our full year
forecast, while depreciation expense rose 2.4% to US$62.3Mil,
representing only 45.9% of our full year forecast.Cash operating
expenses were below estimates, increasing by 2.5% to US$226.5Mil,
representing 48% of our full year forecast. This brought 1H15
EBITDA to US$237.4Mil, up 11.9%, representing 48.5% of COLs full
year forecast. Exhibit 1: 2Q15 Results SummaryCOL ConsensusRevenue
261.4 256.0 -2.1 552.1 48.8 46.6EBITDA 108.6 109.9 1.2 237.4 48.5
45.9EBITDA margin (%) 41.5 42.9 1.4 43.0 -0.3 -0.7Net Income 49.3
46.4 -5.9 100.4 51.0 54.1Net margin (%) 21.7 18.1 -3.5 18.2 0.8
2.5Source: ICT, COL est imat es, Bloombergin US$Mil 2Q14 2Q15
%Change 1H15% of FY Forecast Exhibit 2: 2Q15 Revenue Breakdown2Q14
2Q15 % change 2Q14 2Q15 % change 2Q14 2Q15 % changeAsia 123.9 135.5
9.3 891.6 1,004.5 12.7 139.0 134.9 -2.9Americas 111.7 95.7 -14.3
692.2 684.8 -1.1 161.4 139.7 -13.4EMEA 25.8 24.8 -3.7 225.1 216.1
-4.0 114.5 115.0 0.4Total 261.4 256.0 -2.1 1,808.9 1,905.4 5.3
144.5 134.4 -7.0Source: ICT, COL est imat es, BloombergRevenue
Container volume Implied yield Exhibit 3: 1H15 Revenue
Breakdown1H14 1H15 % change 1H14 1H15 % change 1H14 1H15 %
changeAsia 246.2 297.0 20.6 1,791.5 2,009.5 12.2 137.4 147.8
7.6Americas 212.2 203.4 -4.2 1,337.6 1,416.7 5.9 158.6 143.6
-9.5EMEA 51.9 51.8 -0.3 437.0 461.9 5.7 118.8 112.0 -5.7Total 510.3
552.1 8.2 3,566.0 3,888.1 9.0 143.1 142.0 -0.8Source: ICT, COL est
imat es, BloombergRevenue Container volume Implied yieldP HI L I P
P I NE E QUI T Y R E S E A R C HTUESDAY, 11 AUGUST 2015page 3ICT I
EARNINGS ANALYSISRevenues slightly missed estimates due to
Portland, Poland and currency devaluation1H15 revenues rose 8.2% to
US$552.1MIl, slightly missing our estimate, representing 48.8% of
our full year forecast.Container volume grew by 9% to 3.88Mil TEU,
representing only 46% of our full year forecast.Container volume of
fagship Manila International Container Terminal (MICT) rebounded
after the port congestion last year, growing by 9% y/y, although
the yield in the fagship terminal also declined as a result of
lower ancillary service fees.Yantai terminal in China also
performed strongly, with container volume rising 28% y/y. Container
volume growth was also boosted by the continuous ramp up of the
ports in Mexico and Honduras, and the frst full year contribution
of Iraq.However,
containervolumestillfellshortofestimatesduetothesharpdeclineinthevolumeoftheportin
Portland due to the ongoing labor dispute.ICTs port in Poland also
suffered a decline in volume due to weakness in trade, while
revenues from ICTs ports in Brazil and Madagascar were dragged down
by the devaluation of the Real and Euro.EBITDA slightly below
forecast due to revenuesCash operating profts as measured by EBITDA
grew 11.9% in 1H15 to US$237.4Mil, equivalent to
48.5%ofourfullyearforecast.EBITDAslightlymissedourestimateduetolowerthanexpected
revenues.Meanwhile, the rise in ICTs cash operating expenses was
below estimates, increasing by 2.5% to US$226.5Mil, representing
48% of our full year forecast.EBITDA margin improved 100 basis
points to 43.0%, in line with our forecast.Maintaining HOLD
ratingWecurrentlyhaveaHOLDratingonICTwithaFVestimateofPhp110.6/sh.Whilenearterm
earningsgrowthoutlookwanedduetorisingcostpressures,westilllikeICTslongtermoutlook
givenitssuccessfultrackrecordofgrowingitsportportfoliothroughacquisitionsandgreenfeld
projects,anditsfocusonemergingeconomieswhichhaveafavorablelongtermgrowthoutlook
compared to overall global economy, However, valuations are not
compelling at this point. Based on ICTs current price of
Php108.5/sh, the stock is already fairly valued.P HI L I P P I NE E
QUI T Y R E S E A R C HTUESDAY, 11 AUGUST 2015page 4ICT I EARNINGS
ANALYSISInvestment Rating DefnitionsStocks that have a BUY rating
have attractive fundamentals and valuations, based on our analysis.
We expect the share price to outperform the market in the next six
to twelve months.Stocks that have a HOLD rating have either 1.)
attractive fundamentals but expensive valuations; 2.) attractive
valuations but near term earnings outlook might be poor or
vulnerable to numerous risks. Given the said factors, the share
price of the stock may perform merely inline or underperform the
market in the next six to twelve months.We dislike both the
valuations and fundamentals of stocks with a SELL rating. We expect
the share price to underperform in the next six to twelve
months.Securities recommended, offered or sold by COL Financial
Group, Inc.are subject to investment risks, including the possible
loss of the principal amount invested. Although information has
been obtained from and is based upon sources we believe to be
reliable, we do not guarantee its accuracy and it may be incomplete
or condensed. All opinions and estimates constitute the judgment of
COLs Equity Research Department as of the date of the report and
are subject to change without notice. This report is for
informational purposes only and is not intended as an offer or
solicitation for the purchase or sale of a security. COL Financial
ans/or its employees not involved in the preparation of this report
may have investments in securities or derivatives of securities of
securities of the companies mentioned in this report, and may trade
them in ways different from those discussed in this
report.Important Disclaimers2401-B East Tower, Philippine Stock
Exchange Centre, Exchange Road, Ortigas Center, Pasig City, 1605
PhilippinesTel: +632 636-5411Fax: +632 635-4632Website:
http://www.colfinancial.comBUY HOLD SELL
