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Sector: Transportation
International Container Terminal Services Inc
- Sector: Transportation
- Sub Sector: Shipping and Infrastructure
- Country: Philippines
- Bond: ICTPM 3.5 31
- Indicative Yield-to-Maturity (YTM): 4.96%
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Fundamental View
AS OF 07 May 2025We expect ICTSI to remain resilient amid global growth slowdown fears owing to yield improvements and strong cost control.
ICTSI has steadily deleveraged over the past 5 years which we see as prudent financial management. Yet management’s recent lean towards growth at the expense of deleveraging could restrain improvements in credit metrics.
While ICTSI is exposed to material EM-related geopolitical risks, we think its geographically diversified revenue base across 20 countries limits country-specific risks.
While sizable capex and high dividend payouts could strain ICTSI’s credit profile, we take comfort in ICTSI’s robust OCF generation that should keep FCFs positive.
Business Description
AS OF 07 May 2025- ICTSI develops and operates common user container terminals, with a focus on those within Origin and Destination (O&D) ports based in emerging markets.
- ICTSI provides integrated ports services that facilitate the receiving, handling and storage of cargo. These are broadly split into four streams: vessel charges (i.e. services relating to moving cargo on and off ships), yard charges (i.e. services relating to moving cargo in the container and storage yards), storage fees (i.e. services relating to cargo and container storage), and other ancillary fees.
- ICTSI currently operates across 32 port concessions in 19 countries. As of end-FY23, ICTSI's revenues are well diversified across the Philippines (27% of total), Other Asia (14%), EMEA (20%) and the Americas (39%).
- ICTSI operates its container terminals under long-dated concession agreements (typically ~25 years) with the relevant local port authorities or governments. For some concessions, fees charged to customers are regulated by the authorities that prescribe maximum price limits and, in some cases, allow for CPI-linked tariff hikes. For other concessions, fees charged are unregulated and allow for greater price-setting flexibility and volatility too.
- ICTSI is required to make periodic fee payments to the respective authorities for the right to operate the concessions. These payments are typically a combination of fixed charges and variable charges based on cargo traffic volume or gross revenues.
Risk & Catalysts
AS OF 07 May 2025ICTSI is exposed to EM-related geopolitical, regulatory and operating risks. That said, we think the impact is mitigated by its geographically diversified revenue base across 20 countries that limits country-specific risks.
Trade uncertainties from Trump’s policies could hamper cargo volume growth.
Growing capex tendencies and high dividend payouts could strain ICTSI’s free cash flows and credit metrics, though we think the impact is mitigated by ICTSI’s robust operating cash flow generation.
While ICTSI is exposed to FX depreciation risks as most of its revenues and cash expenses are in EM currencies, natural hedging has been fairly effective thus far.
Key Metric
AS OF 07 May 2025| $ mn | FY22 | FY23 | FY24 | 1Q24 | 1Q25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 71.9% | 73.0% | 70.1% | 77.0% | 76.3% |
| Net Debt to Book Cap | 58.2% | 61.0% | 52.6% | 60.2% | 63.1% |
| Debt/Total Equity | 255.3% | 269.9% | 233.9% | 334.1% | 321.4% |
| Debt/Total Assets | 62.5% | 60.3% | 58.2% | 63.7% | 59.1% |
| Gross Leverage | 3.1x | 2.9x | 2.5x | 3.1x | 2.3x |
| Net Leverage | 2.5x | 2.4x | 1.9x | 2.4x | 1.9x |
| Interest Coverage | 4.6x | 4.4x | 4.9x | 4.5x | 5.1x |
| EBITDA Margin | 62.8% | 63.0% | 65.0% | 64.9% | 65.7% |
CreditSight View Comment
AS OF 07 May 2025We have a Market perform recommendation on ICTSI. We think ICTSI 2030 and 2031 trades fairly to PLDT 2031 and Globe Telecom 2030. We expect ICTSI’s credit metrics could remain improve slightly in FY25 as steady yield improvements and sturdy domestic trade activity could outweigh high capex, potential M&A, and trade uncertainties from Trump’s policies. While ICTSI is exposed to EM-related geopolitical and operating risks (notably in the Mid East and Russia-Ukraine), we believe these are mitigated by its highly geographically diversified revenues. We also expect ICTSI’s robust cash-generative business to drive positive free cash flows even amid persisting capex and dividends. We see low non-call risk for the ICTSI c.2026 perp
Recommendation Reviewed: May 07, 2025
Recommendation Changed: August 16, 2023
Who We Recommend
BDO Unibank
Woori Financial Group
Shinhan Financial Group
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Fundamental View
AS OF 17 Apr 2025Delta’s focus on premium cabin and atlantic flying driven by its loyalty program lead the airline to enjoy industry best profitability. Delta targets 1x gross leverage, an A level balance sheet in our view.
Delta pulled its full year guidance during 1Q25 earnings and zeroed out capacity growth for the second half of the year, citing a more challenging macro environment given the uncertainty on global trade.
Delta has Outperformed peers this year on its strong credit quality and defensive nature. We are retaining our O/P view and continue to favor DAL compared to LUV. We are happy to capture to 50 bps basis between the two.
Business Description
AS OF 17 Apr 2025- DAL is one of the world's largest airlines with a network comparable to UAL and AAL in size and distribution. It is perceived by the flying public as the "most premium" of the Big Three network carriers in the US.
- DAL has an extensive global network of airline affiliations, including Air France/KLM, Virgin Atlantic, Aeromexico, LATAM, and China Eastern.
- DAL management is the most evolved of the US network airlines, previously focused on used aircraft to lower capital costs and setting up full-cycle maintenance programs, buying a refinery to hedge crack spread, and developing non-commodity products including the leading loyalty program.
Risk & Catalysts
AS OF 17 Apr 2025DAL faces all the industry exogenous risks: geopolitical events, pandemics, oil price volatility, and now recessionary fears.
The recently weaker dollar may manifest as a headwind to international demand. DAL was able to capitalize on strong Atlantic recovery post-pandemic through its extensive existing network; however, it lost its status as the number one airline on US-Europe routes to United which grew very fast in the segment and now occupies the first spot.
The airline noted that demand winds have shifted swiftly after the tariff talks started to pick up. CEO Ed Bastian noted that there was a significant drop in demand, both for consumers in the main cabin and for business travelers. While the premium cabin is currently holding up, it remains to be seen if the recession fears will hit that demand segment as well.
DAL’s 1x leverage target is the lowest target in the industry.
Key Metric
AS OF 17 Apr 2025| $ mn | Y22 | Y23 | Y24 | LTM 1Q25 |
|---|---|---|---|---|
| Revenue | 50,582 | 58,048 | 61,642 | 61,934 |
| EBIT | 3,661 | 5,521 | 5,995 | 5,950 |
| EBITDAR | 6,276 | 8,394 | 9,056 | 9,004 |
| Cash | 3,266 | 2,741 | 3,069 | 3,711 |
| Short Term Investments | 8,412 | 10,061 | 721 | 132 |
| Net Debt | 16,634 | 16,269 | 13,151 | 12,112 |
| Adjusted Debt/LTM EBITDAR | 4.9x | 3.3x | 2.5x | 2.5x |
CreditSight View Comment
AS OF 02 May 2025Delta’s focus on premium cabin and atlantic flying driven by its loyalty program lead the airline to enjoy industry best profitability. Delta targets 1x gross leverage, an A level balance sheet in our view. Delta pulled its full year guidance during 1Q25 earnings and zeroed out capacity growth for the second half of the year, citing a more challenging macro environment given the uncertainty on global trade. Delta has Outperformed peers this year on its strong credit quality and defensive nature. We are retaining our Outperform view and continue to favor DAL compared to LUV. We are happy to capture to 50 bps basis between the two.
Recommendation Reviewed: May 02, 2025
Recommendation Changed: April 12, 2024
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group