In today’s briefing:
- International Container – Tear Sheet – Lucror Analytics
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International Container – Tear Sheet – Lucror Analytics
We view International Container (ICTSI) as “Low Risk” on the LARA scale. This reflects the company’s: [1] leading position in Philippine container terminal operations; [2] geographically diversified operations, with port terminal assets across 19 countries; and [3] sound business capability to execute its expansion plans, as evidenced by its track record of healthy revenue growth and margin expansion. These are balanced against the risks associated with: [1] a potential increase in competitive pressures in the container shipping industry; [2] the Port of Manila’s small scale (in terms of annual throughput) compared to major ports worldwide; and [3] exposure to political and event risks arising from the company’s operations in frontier markets.
Our fundamental Credit Bias on ICTSI is “Stable”. The company’s leverage has improved over the years, supported by earnings growth and strong OCF generation. That said, FCF may be tempered by high capex and dividend payouts.
Controversies are “Material”. In 2017, ICTSI was accused by the International Transport Workers Federation (ITF) of violating various labour rights. This included the illegal sacking of outsourced workers at its Madagascar terminal, paying “poverty wages” at the company’s terminals in Indonesia and Madagascar, discrimination against unionised workers, as well as safety breaches at various terminals. The ITF also accused ICTSI of profiting off dictatorships, by working with authoritarian governments in Sudan, Syria and the Democratic Republic of Congo. In March 2023, the Organised Crime and Corruption Reporting Project accused the company of bribing two officials from the PNG Ports Corporation in relation to concession awards for its terminals in Papua New Guinea. That said, ICTSI does not appear to be materially impacted by the controversies. Overall, the ESG Impact on Credit is “Neutral”.