August 10, 2014

ICTSI reports 23% hike in 1H14 income

In a disclosure to the Exchange, ICTSI announced 1H14 earnings that was up 23% versus the previous year primarily due to the one-time gain from a sale of a non-core asset in Cebu and a gain on the termination of its management contract in ICTSI India and from the proceeds of its insurance claims in CGSA. Sans these 1-off gains, ICTSI net recurring income grew by just 3% YoY to US$85.11m.

Revenues increased 23% YoY to US$510m on the back of volumes growth of 18% in 1H14 to 3.56 TEUs driven primarily by the Americas which grew 77% YoY due to the start of operations of new ports. This was however offset by a 29% increase in cash operating expenses arising from increases in volume growth, start-up costs of the new terminals and higher business development costs.

Our take: ICTSI is currently in the investment stage where its near-term results will be weighed by additional debt and heavy CAPEX for its newly won contracts. These include the port of Umm Qasr, Iraq and VICT in Melbourne, Australia. The port of Um Qasr is the largest port in Iraq which handled throughput of approximately 500,000 TEUs in 2013. ICTSI is expected to invest an estimated US$130m to rehabilitate the berth and expand capacity to about 900,000 TEUS.

Completion is expected to be in mid2015. The contract for the port of Melbourne is for the design, construction, commissioning, operating, maintaining and financing of the terminal and empty container park at Webb dock east in the Port of Melbourne.

Investment for this project is estimated to be US$407m for phase 1 which will have a capacity of 350,000 TEUs and be ready for commercial operations by 1Q17 and US$101m for phase 2 which should further expand capacity to 1,000,000 TEUS and be ready by 1Q18. – WealthSec