May 06, 2014

ICTSI wins Port of Melbourne, Australia contract

In a disclosure to the Exchange, ICTSI last Friday announced that its 90%-owned subsidiary, Victoria International Container Terminal Limited (VICTL), has signed a 26-year contract to design, finance, construct, commission, operate and maintain the terminal and empty container park (ECP) at Webb Dock East in the Port of Melbourne.

The company estimates Phase 1 of the terminal to be ready for operation by December 2016 and will have one berth with three Post-Panamax-Ship-to-shore cranes and an estimated capacity of 350,000 TEUs. The ECP, on the other hand, will have a capacity of approximately 200,000 TEUs. Construction of the terminal and ECP is expected to start in 4Q14.

Phase 2 of the terminal which will be operational by December 2017, will add an additional berth and increase the number of Post-Panamax-Ship-to-shore to five. When fully developed and required by volume demand, the terminal will have six Post-Panamax-ship-to-shore cranes and will be able to handle up to 1.4m TEUs annually while the ECP will have a capacity of 280,000 TEUs.

The investment required for both phases of the project is estimated at US$407m while an additional US$101m investment would be required to increase the capacity to 1.4m TEUS annually should the need arise.

Our take: Once fully developed, we expect the port to contribute significantly to ICTSI earnings and be a considerable driver of growth. Given the size of the development and the much higher tariffs in Australia, we expect the contract to be one of the largest revenue contributors to the company, most likely second only to MICT.

In addition, the contract is a big win for ICTSI as it was able to beat out the big players including Australia incumbent Hutchison Whampoa who operates the ports of Sydney and Brsibane. – WealthSec