International Container Terminal Services Inc.

FRI 07 MAY 2021

1Q21 core operating performance

beats estimates

HOLD
ICT’s 1Q21 core net income rose 51.2% to US$90.1Mil, representing, higher than forecasts,
representing 29% of COL forecast and 34.5% of consensus forecast. In terms of core operating
performance, revenues 15.9% to US$435.6Mil, representing 25.8% of our full year forecast
and 27.9% of consensus forecast. Throughput volume rose 7.9% y/y during 1Q21 to 2.7Mil TICKER: ICT
TEU while average yield rose by 7.4% to US$160.9/TEU. EBITDA rose 24.8% to US$264.8Mil, FAIR VALUE: 142.30
representing 27.7% of COL forecast.
CURRENT PRICE: 128.50
Volume recovery gains traction in 1Q21. ICT’s volume recovery gained traction in 1Q21, UPSIDE: 10.74
posting a 7.9% growth y/y (following 6.9% growth in 4Q20, 3.1% growth in 3Q20). Ports in
Asia registered a 7% increase in volume during the period, brought about by the recovery ABSOLUTE PERFORMANCE
of flagship port MICT (higher single digit volume growth), as well as the strong performance
1M 3M YTD
of its ports in Australia and China. Europe/Middle East/Africa (EMEA) volume increased
ICT 0.39 3.96 4.05
5.9% y/y, driven by growth in ports in Croatia, Poland and Madagascar, but offset by the
PSEI -4.66 -10.49 -12.00
decline of ports in Iraq and Georgia. ICT’s ports in Americas rose 10.8% brought about by
the growth in the volume of ports in Ecuador, Brazil and Mexico.

Sustained volume growth seen in 2Q21. Management indicated that while the economic MARKET DATA
recovery in different parts of the world will remain uneven in the succeeding quarters, the Market Cap 260,316.31Mil
company is seeing signs that overall throughput volume growth will gain further traction Outstanding Shares 2,025.81Mil
for the remaining of the year. For the MICT, even with the imposition of the MECQ in April, 52 Wk Range 79.20 - 131.40
the port’s volume continue to grow to near pre-pandemic level. Most ports in the Americas 3Mo Ave Daily T/O 121.20Mil
also continue to register strong volume growth numbers in April.

FORECAST SUMMARY

Year to Dec. 31 2017 2018 2019 2020 2021E 2022E

Sales 1,244.4 1,385.8 1,481.4 1,505.5 1,690.7 1,782.7
% change y/y 10.3 11.4 6.9 1.6 12.3 5.4
EBIT 404.5 446.5 595.2 646.7 751.8 801.6
% change y/y 7.2 10.4 33.3 8.7 16.3 6.6
EBIT Margin (%) 32.5 32.2 40.2 43.0 44.5 45.0
EBITDA 578.0 642.2 830.1 876.8 980.6 1,033.9
% change y/y 10.1 11.1 29.3 5.6 11.8 5.4
EBITDA Margin (%) 46.4 46.3 56.0 58.2 58.0 58.0
Net Profits 182.1 221.5 100.4 101.8 337.0 372.6
% change y/y 1.2 21.6 -54.7 1.4 231.1 10.6
NPM (%) 14.6 16.0 6.8 6.8 19.9 20.9
EPS (cents) 0.069 0.078 0.022 0.016 0.166 0.184
% change y/y 4.9 12.7 -71.9 -25.2 915.3 10.6

RELATIVE VALUE
P/E(X) 36.4 32.3 115.1 153.8 15.1 13.7
P/BV(X) 2.7 2.3 3.1 2.7 2.4 2.1
ROE(%) 9.7 9.9 6.1 5.5 15.8 15.4 George Ching
BVPS(P) 0.9 1.1 0.8 0.9 1.1 1.2 Senior Research Manager
Dividend yield(%) 0.7 1.9 1.9 2.6 1.8 2.6 george.ching@colfinancial.com
*So urce: COL estimates

Disclaimer: All content provided in COL Reports are meant to be read in the COL Financial website. Accuracy and completeness of content cannot be guaranteed if reports are viewed outside of the
COL Financial website as these may be subject to tampering or unauthorized alterations.
 EARNINGS ANALYSIS I ICT: 1Q21 CORE OPERATING PERFORMANCE BEATS ESTIMATE

FRI 07 MAY 2021

1Q21 core operating performance beats estimates

ICT’s 1Q21 core net income rose 51.2% to US$90.1Mil, representing, higher than
forecasts, representing 29% of COL forecast and 34.5% of consensus forecast. In terms
of core operating performance, revenues 15.9% to US$435.6Mil, representing 25.8% of
our full year forecast and 27.9% of consensus forecast. Throughput volume rose 7.9% y/y
during 1Q21 to 2.7Mil TEU while average yield rose by 7.4% to US$160.9/TEU. EBITDA
rose 24.8% to US$264.8Mil, representing 27.7% of COL forecast. Cash operating cost rose
4.4% to US$170.8Mil, representing 23.3% of our full year forecast.

Exhibit 1: 1Q21 Results Summary

% of FY Forecast
in US$Mil 1Q20 1Q21 %Change
COL Consensus
Revenue 375.8 435.6 15.9 25.8 26.3
EBITDA 212.2 264.8 24.8 27.7 27.9
EBITDA margin (%) 56.5 60.8 4.3 4.3 3.5
Net Income 59.6 90.1 51.2 29.0 34.5
Net margin (%) 15.9 20.7 4.8 2.3 4.9
source: ICT, COL estimates,Bloomberg

Exhibit 2: 1Q21 Revenue Breakdown

Revenue Container volume Implied yield

1Q20 1Q21 % change 1Q20 1Q21 % change 1Q20 1Q21 % change
Asia 166.1 186.5 12.3 1,107.1 1,185.0 7.0 150.1 157.4 4.9
Americas 120.4 148.1 23.0 787.9 872.8 10.8 152.9 169.7 11.0
EMEA 89.2 101.0 13.2 613.9 650.0 5.9 145.3 155.3 6.9
Total 375.8 435.6 15.9 2,509.0 2,707.8 7.9 149.8 160.9 7.4
source: ICT, COL estimates,Bloomberg

Volume recovery gains traction in 1Q21

ICT’s volume recovery gained traction in 1Q21, posting a 7.9% growth y/y (following 6.9%
growth in 4Q20, 3.1% growth in 3Q20). Ports in Asia registered a 7% increase in volume
during the period, brought about by the recovery of flagship port MICT (higher single
digit volume growth), as well as the strong performance of its ports in Australia and
China. Europe/Middle East/Africa (EMEA) volume increased 5.9% y/y, driven by growth
in ports in Croatia, Poland and Madagascar, but offset by the decline of ports in Iraq and
Georgia. ICT’s ports in Americas rose 10.8% brought about by the growth in the volume
of ports in Ecuador, Brazil and Mexico.

COL Financial Group, Inc. 2

 EARNINGS ANALYSIS I ICT: 1Q21 CORE OPERATING PERFORMANCE BEATS ESTIMATE

FRI 07 MAY 2021

ICT’s yield/TEU rose 7.4% y/y in 1Q21 to US$160.9/TEU

The y/y rise in yield was mainly due to tariff adjustments in key ports such as MICT,
increase in storage in ancillary services at a number of terminals particularly in the
Americas segment, as well as the favorable overall impact of currency appreciation
against the US Dollar: Philippine Peso (5.24%), Euro (9.27%), RMB (7.69%), AUD (17.4%)
against the US Dollar.

EBITDA increases by 24.8% driven by revenue growth and

cost reduction initiatives

Cash operating cost rose 4.4% to US$170.8Mil, representing 23.3% of our full year
forecast. The moderate rise in cash operating cost (compared to revenue growth of
15.9%) was primarily driven by the company’s cash operating cost reduction initiatives
(which began in 2020 at the onset of the Covid-19 pandemic). Management expects
that these cost control measures will be sustained throughout FY21 and will continue
to support ICT’s EBITDA margin going forward. EBITDA rose by 24.8% to US$264.8Mil,
equivalent to 27.7% of our full year forecast, while EBITDA margin improve to 60.8% from
56.5% during the same period of last year. In light of the strong EBITDA margin in 1Q21
and management guidance that the cost reduction initiatives will be sustained, we are
increasing our FY21 EBITDA by 2.7% to US$980.6Mil, and our FY22 EBITDA by 2.6% to
US$1.03Bil.

Sustained volume growth seen in 2Q21

Management indicated that while the economic recovery in different parts of the world
will remain uneven in the succeeding quarters, the company is seeing signs that overall
throughput volume growth will gain further traction for the remaining of the year. For
the MICT, even with the imposition of the MECQ in April, the port’s volume continue to
grow to near pre-pandemic level. Most ports in the Americas also continue to register
strong volume growth numbers in April.

COL Financial Group, Inc. 3

 EARNINGS ANALYSIS I ICT: 1Q21 CORE OPERATING PERFORMANCE BEATS ESTIMATE

FRI 07 MAY 2021

Maintaining HOLD rating

In line with the increase in our EBITDA forecast and the passage of the CREATE Bill, we
are increasing our FY21E earnings forecast by 8.6% to US$337Mil, and our FY22E forecast
by 8.4% to US$372.6Mil. We are also raising our FV estimate by 6.8% to Php142.3/sh.
We are maintaining our HOLD rating on ICT. We continue like ICT given the success of
ICT’s greenfield ports in Australia, Congo and Rio as these ports will be the key earnings
growth driver for the company in the next few years. Despite the lingering impact of the
COVID-19 pandemic on global trade, we believe that the company’s earnings is set to
rebound in FY21 following the recovery in global trade and the company’s cost reduction
initiatives. However, ICT’s share price has increased by 55% in the past 12 months,
outperforming the PSEi’s 11.4% increase during the period. Based on its current market
price of Php128.5/sh, upside to our FV estimate is at 10.8%.

COL Financial Group, Inc. 4

 EARNINGS ANALYSIS I ICT: 1Q21 CORE OPERATING PERFORMANCE BEATS ESTIMATE

FRI 07 MAY 2021

International INCOME STATEMENT (IN US$)

Container Terminal Revenues

2017
1,244
2018
1,386
2019
1,481
2020
1,505
2021E
1,691
20220E
1,783
Services Inc. (ICT) % Growth 10.3% 11.4% 6.9% 1.6% 12.3% 5.4%
EBIT 405 447 595 647 752 802
COMPANY BACKGROUND % Growth 7.2% 10.4% 33.3% 8.7% 16.3% 6.6%
EBITDA 578 642 830 877 981 1,034
ICTSI (ICT) is an international operator of % Growth 10.1% 11.1% 29.3% 5.6% 11.8% 5.4%
container terminals that caters to the global Interest Expense (79) (77) (85) (90) (96) (96)
container shipping industry. Its business Other Income/Expense (78) (60) (316) (362) (189) (192)
involves the operation, management, Pretax Income 248 309 193 195 467 514
development and acquisition of container Tax Expense 41 59 61 55 96 105
terminals. Its expertise are container Net Income 182 221 100 102 337 373
% Growth 1.2% 21.6% -54.7% 1.4% 231.1% 10.6%
terminals with total annual throughputs
EPS 0.07 0.08 0.02 0.02 0.17 0.18
ranging from 50,000 to 2,500,000TEUs % Growth 4.9% 12.7% -71.9% -25.2% 915.3% 10.6%
annually. ICT currently operates 31 terminal
BALANCE SHEET (IN US$)
concessions and port development projects
in 18 countries worldwide. In 2017,2018 2017 2018 2019 2020 2021E 20220E
Cash & Equivalents 279 447 235 735 874 1,209
and 2019 ICT handled consolidated
Trade Receivables 113 120 124 129 151 160
throughput of 9,153,500 TEUs, 9,736,600 Inventories - - - - 1 2
TEUs, and 10,178,000 TEUs, respectively. Other Current Assets 109 106 109 105 138 145
The company has an estimated handling PPE 1,456 1,378 1,419 1,414 1,369 1,320
capacity of ~ 16.6Mil TEU annually. Other Non-Current Assets 2,414 2,651 3,863 3,812 3,768 3,727
Total Assets 4,371 4,703 5,751 6,195 6,300 6,560
Accounts Payable 277 309 348 354 239 231
REVENUE BREAKDOWN ST Debts 83 87 235 53 53 53
Other Current Liabilities 41 43 72 84 84 84
LT Debts 1,410 1,220 1,428 1,715 1,715 1,715
12.1% Other Non-Current Liabilities 687 815 2,034 2,129 2,070 2,061
12.1%
Total Liabilities 2,498 2,474 4,116 4,334 4,161 4,144
Total Equity 1,873 2,229 1,635 1,862 2,139 2,416
Total Liabilities & Equity 4,371 4,703 5,751 6,195 6,300 6,560
BVPS 0.9 1.1 0.8 0.9 1.1 1.2
52.1%
52.1%
35.8%
35.8% CASHFLOW STATEMENT (IN US$)
2017 2018 2019 2020 2021E 20220E
Net Income 182 221 100 102 337 373
Depreciation & Amortization 173 196 235 230 229 232
Other Non-Cash Exp (Gains) 65 127 333 58 68 70
Interest Expense (Income) 100 101 108 110 115 115
Asia Americas EMEA
Asia Americas EMEA Decrease (Increase) in Working Cap 43 -3 -18 64 -169 -24
Operating Cash Flow 564 642 759 564 580 766
Capex -212 -73 -56 -48 -56 -56
Other Investments -220 -255 -604 -202 -122 -76
Investing Cash Flow -432 -328 -660 -250 -178 -132
Proceeds (Payment) Debts -14 -170 351 330 0 0
Payment of Cash Dividends -113 -115 216 -115 -114 -113
Others -58 152 -871 -177 -148 -187
Financing Cash Flow -185 -133 -305 39 -262 -299
Change in Cash -53 182 -206 353 140 334

COL Financial Group, Inc. 5

 EARNINGS ANALYSIS I ICT: 1Q21 CORE OPERATING PERFORMANCE BEATS ESTIMATE

FRI 07 MAY 2021

INVESTMENT THESIS: KEY RATIOS

2017 2018 2019 2020 2021E 20220E
Greenfield projects to drive future
GPM (%) - - - - - -
earnings growth EBITDA Margin (%) 46.4% 46.3% 56.0% 58.2% 58.0% 58.0%
With the exception of its port in Argentina, OPM (%) 32.5% 32.2% 40.2% 43.0% 44.5% 45.0%
the success of ICT’s greenfield ports NPM (%) 14.6% 16.0% 6.8% 6.8% 19.9% 20.9%
(Australia, Congo, Papua New Guinea and Times Interest Earned (X) 35.95 33.18 33.49 19.26 22.39 23.87
Colombia) will be the key earnings growth Current Ratio (X) 1.25 1.54 0.72 1.98 3.10 4.12
Net D/E Ratio (X) 0.64 0.36 0.73 0.53 0.39 0.21
driver for the company in the next few years
Days Receivable 33.1 31.7 30.7 31.4 32.7 32.7
as these new ports will have a combined
Asset T/O (%) 28.5% 29.5% 25.8% 24.3% 26.8% 27.2%
capacity of 3Mil TEU, equivalent to 29% ROAE (%) 4.3% 4.9% 1.9% 1.7% 5.4% 5.8%
of ICT’s total volume in 2019. Despite the
headwinds brought about by the COVID-19 MAJOR CORPORATE DEVELOPMENTS (5-YEARS)
pandemic on 2020 earnings, we believe that
the company’s earnings is set to rebound Sold 90Mil shares @ Php91/sh and raised Php8.19Bil through top-up
05/01/2013
placement
next year following the recovery in global
trade and the company’s cost reduction
initiatives.

COL Financial Group, Inc. 6

 EARNINGS ANALYSIS I ICT: 1Q21 CORE OPERATING PERFORMANCE BEATS ESTIMATE

FRI 07 MAY 2021

Valuation VALUATION ASSUMPTIONS

Methodology For DCF

Risk Premium 6.5%
Risk Free Rate 4.0%
Beta 1.10
Cost of Equity 11%
Cost of Debt 6.0%
Tax Rate 20.0%
WACC 8.3%
Terminal Growth Rate 0.0%

PV (FY19E-FY21E) 7,838
PV of Terminal Value 0
Enterprise Value 7,838
Less: Net Debt 2,184
Add: Other Investments
Equity Value 5,654
O/S 2,026
FV Estimate 142.30

COL Financial Group, Inc. 7

 EARNINGS ANALYSIS I ICT: 1Q21 CORE OPERATING PERFORMANCE BEATS ESTIMATE

FRI 07 MAY 2021

IMPORTANT RATING DEFINITIONS

BUY
Stocks 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
12 months.

HOLD
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 in line or underperform in the market in the next six to twelve
months.

SELL
We dislike both the valuations and fundamentals of stocks with a SELL rating. We expect the share price to underperform in the next six to12 months.

IMPORTANT DISCLAIMER
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 said information may be
incomplete or condensed. All opinions and estimates constitute the judgment of COL’s Equity Research Department as of the date of the report and are subject to change
without prior 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 and/
or its employees not involved in the preparation of this report may have investments in securities of derivatives of the companies mentioned in this report and may trade
them in ways different from those discussed in this report.

COL RESEARCH TEAM

APRIL LYNN TAN, CFA

VP & HEAD OF RESEARCH
april.tan@colfinancial.com

CHARLES WILLIAM ANG, CFA GEORGE CHING RICHARD LAÑEDA, CFA

DEPUTY HEAD OF RESEARCH SENIOR RESEARCH MANAGER SENIOR RESEARCH MANAGER
charles.ang@colfinancial.com george.ching@colfinancial.com richard.laneda@colfinancial.com

JOHN MARTIN LUCIANO, CFA FRANCES ROLFA NICOLAS JUSTIN RICHMOND CHENG, CFA
SENIOR RESEARCH ANALYST RESEARCH ANALYST RESEARCH ANALYST
john.luciano@colfinancial.com rolfa.nicolas@colfinancial.com justin.cheng@colfinancial.com

ADRIAN ALEXANDER YU KERWIN MALCOLM CHAN

RESEARCH ANALYST RESEARCH ANALYST
adrian.yu@colfinancial.com kerwin.chan@colfinancial.com

COL FINANCIAL GROUP, INC.

2402-D EAST TOWER, PHILIPPINE STOCK EXCHANGE CENTRE,
EXCHANGE ROAD, ORTIGAS CENTER, PASIG CITY
PHILIPPINES 1605
TEL NO. +632 636-5411
FAX NO. +632 635-4632
WEBSITE: www.colfinancial.com

COL Financial Group, Inc. 8