Investment Thesis: Looser Trade Restrictions

ICT has remained resilient throughout the year despite the pandemic, with its 9-Month 2020 earnings only down -1% year-on-year (YoY) at $182.6 million. We expect a more significant growth moving forward to be driven by: a) recovery of TEU throughput volume as lockdowns are gradually eased; b) positive implication of Biden’s presidential win on global trade and; c) increase in contributions through acquisitions similar to ICTSI Rio in 2019 (+530,000 TEU capacity).

End of the trade war?

Biden winning the US Presidential elections could bode well for the global trade scene, likely spelling out the end of Trump’s 2-year riff with China. While details on Biden’s trade policy are expected to be released by January 2021, we expect these to be more diplomatic in comparison to Trump’s all-out tariff war in the last two years, and should ease tension among participants in the global trade community.

Recommendation

We initiate coverage on ICT with a BUY rating and a 12- month Discounted Cash Flow (DCF) based target price of P141.00/share.

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