International Container Terminal Services [ICT 365.00, up 2.0%; 56% avgVol] [link] reported a Q2 net income of $232 million, up 32% y/y from its Q2/23 net income of $175 million, and up 1% q/q from its Q1/24 net income of $229 million. In the associated press release, Enrique Razon’s ICT attributed the performance to “the strength of ICTSI’s diversified international portfolio”. H1 revenues were up 13% to $1.32 billion and free cash flow was up 24% to $602 million, which ICT said gives it “significant headroom to invest for future growth.”
MB bottom-line: The Razon Family has a stranglehold on container terminals here, and has a significant position “selling shovels to gold rush miners” in the long-term movement of raw materials from global locations (SE Asia, South America, Africa) to China. While the family seems perfectly positioned to monetize China’s growth and our own economic activity, the business still has vulnerabilities which we saw in full display during the COVID pandemic, and which we could see during any significant slowdown in China’s consumption or global trade more generally. That said, it’s almost like ICT plays in a league of one, but that’s only from our PH-based perspective. It’s easy to forget ICT’s true international reach, and in an industry as global in scale as “container terminal operators” go, ICT is a big player in a relatively fragmented worldwide market. All this to say that while ICT might be the LeBron James of Philippine container ports, it still has plenty of room to grow and plenty of hardware that it can rack up playing hardball in the international game. It’s in direct competition with household names like A.P. Moller-Maersk. They might be the most impactful PH-based company on a global scale. But are there roads for ICT to play an even bigger role here? Maybe we'll find out soon. Cash doesn't sit still for long.
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