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International Container Terminal Services Inc (ICTSI) Extended Graph Analysis

December 11th, 2019 Posted by Extended Analysis No Comment yet

About the Company

ICTSI

International Container Terminal Services Inc (ICTSI) is a publicly listed corporation at the Philippine Stock Exchange. ICTSI is a global port operator firm and was founded on December 24, 1987 by Enrique K. Razon a Filipino businessman. Forbes magazine has named Enrique Razon “The Third Richest Man in the Philippines”  in February 2015, whose net worth was USD 5.1 billion in 2019. His family have been involved in the business of marine cargo handling in the Philippines for three generations.

ICTSI is headquartered and established at the Port of Manila, Philippines. The company has 32 terminals in eighteen countries. The major terminals are in the Philippines, Asia Pacific, Europe, Middle East and Africa;and Latin America.

Services offered by the company were container port establishment, port management, cargo handling and rail freight.

International Container Terminal Services Inc (ICTSI) Extended Graph Analysis

 

1. ICTSI CASH FLOWS

ICTSI CASH FLOW

2014 2015 2016 2017 2018 2019
Net cash provided by operating activities 387,821,210 407,736,739 466,948,218 564,011,621 642,403,883 695,452,883
Net cash used for investing activities -340,777,017 -547,611,023 -468,466,048 -432,380,540 -327,899,907 -511,297,907
Net cash provided by (used for) financing activities -94,138,066 297,079,001 -21,678,513 -184,772,107 -132,554,225 -282,539,225
Capital expenditure -297,082,245 -405,428,152 -393,684,881 -323,105,285 -289,999,212 -224,000,212
Free cash flow 100,738,965 2,308,587 73,263,337 240,906,336 352,404,671 471,452,671
Working Capital 76,000,000 225,000,000 79,000,000 100,000,000 235,000,000 235,000,000

Facts:

  • Net cash provided by operating activities were $695,452,883 in 2019.
  • Cash used for investing activities were -$511,297,907 in 2019.
  • Net cash provided by (used for) financing activities were -$282,539,225 in 2019.
  • Capital expenditures were -$224 million in 2019.
  • Free cash flow was $471,452,671 in 2019.
  • Working capital was $235 million in 2019.

Explanation:

 

  • Cash from operating activities were net income, and depreciation and amortization which represents 54 and 29 percent respectively.
  • Cash used for investing activities were purchases of property, plant and equipment; purchases of intangibles and acquisitions.
  • Net cash provided by (used for) financing activities were debt issued, debt repayments, common stock issued, and dividends paid.
  • Capital expenditures were investment in property, plant and equipment, and purchases of intangibles.
  • Free cash flow increases year-over-year and has a growth of 368 percent in five years.
  • Working capital was erratic in movement howbeit, it has grown 209 percent in five years.

 

Interpretation

The management is efficient in providing cash from operations and it’s growing year after year in the last five years. There was free cash flow left after deducting capital expenditures and is growing due to increases in net income in the last five years.

 

2. ICTSI BALANCE SHEET

ICTSI BALANCE SHEET

2014 2015 2016 2017 2018
Total cash 194,297,656 354,481,813 325,058,592 279,427,071 447,079,325
Current assets 359,623,060 513,717,457 525,009,678 500,981,120 673,439,308
Net property, plant and equipment 934,435,672 1,148,856,114 1,381,483,081 1,456,191,640 1,378,048,546
Non-current assets 3,041,147,322 3,327,714,758 3,657,116,736 3,869,705,491 4,029,492,959
Total assets 3,400,770,382 3,841,432,215 4,182,126,414 4,370,686,611 4,702,932,267
Short-term debt 72,253,157 56,492,307 55,084,088 83,336,490 86,566,738
Current liabilities 283,545,006 288,751,239 445,843,331 401,319,650 438,712,427
Long-term debt 998,193,586 1,026,578,274 1,326,280,115 1,410,268,488 1,220,486,951
Total non-current liabilities 1,801,183,251 1,878,237,857 2,111,886,295 2,261,437,016 2,200,523,912
Total liabilities 2,084,728,257 2,166,989,096 2,557,729,626 2,662,756,666 2,639,236,339
Stockholders’ equity 1,316,042,125 1,674,443,119 1,624,396,788 1,707,929,945 2,063,695,928

Facts:

  • Total cash was $447 million in 2018.
  • Current assets were $673.4 million in 2019.
  • Net property, plant and equipment was $1.378 billion in 2018.
  • Non-current assets were $4 billion in 2018.
  • Total assets were $4.7 billion in 2018.
  • Short-term debt was $86.567 million in 2018.
  • Current liabilities were $439 million in 2018.
  • Long-term debt was $1.220 billion in 2018.
  • Non-current liabilities were $2.2 billion in 2018.
  • Total liabilities were $2.639 billion in 2018.
  • Stockholders’ equity was $2.064 billion in 2018.

Explanation

  • Total cash represents 66 percent of current assets.
  • Current assets represents 14 percent of the total assets.
  • Net property, plant and equipment represents 34 percent of non-current assets.
  • Non-current assets represents 86 percent of total assets.
  • Total assets grew 38 percent in five years.
  • Short-term debt represents 20 percent of current liabilities.
  • Current liabilities represents 17 percent of total liabilities.
  • Long-term debt represents 55 percent of total non-current liabilities. 
  • Total non-current liabilities represents 83 percent of total liabilities.
  • Total liabilities represents 56 percent of total liabilities and stockholders equity.
  • Stockholders equity represents 44 percent of the total liabilities and equity.

Interpretation

The balance sheet is stable, assets increases year-over-year in the last five years. The company showed its capabilities in meeting its current obligations all through its five years of operations. The company is funding its operations with profits. 

 

3. ICTSI INCOME AND MARKET

ICTSI INCOME AND MARKET

2014 2015 2016 2017 2018 2019
Sales 1,167,326,865 1,167,403,419 1,184,341,553 1,350,049,061 1,490,584,208 1,626,752,208
EBIT 320,520,972 321,659,863 375,018,622 405,152,010 446,190,942 516,195,942
Net Income 181,988,167 58,545,218 180,015,587 182,141,250 221,493,804 263,462,804
EBITDA 464,002,477 344,602,306 513,971,780 555,247,790 643,421,448 722,199,448
Market Capitalization 5,229,000,000 3,032,000,000 2,946,000,000 4,305,000,000 3,828,000,000 4,871,000,000
Intrinsic Value 1,556,718,227 927,140,532 1,746,651,264 3,952,136,583 9,129,584,658 21,895,889,889

Facts:

  • Sales were $1.627 billion in 2019.
  • EBIT was $516 million in 2019.
  • Net income was $263 million in 2019.
  • EBITDA was $722 million in 2019.
  • Market capitalization was $4.871 billion in 2019.YTD.
  • Intrinsic value was $21.896 billion in 2019.

Explanation:

  • Sales increased 9 percent from 2018 to 2019 TTM and was averaging $1.3 billion in five years..
  • EBIT represents 32 percent of Sales in 2019.
  • Net income represents 16 percent of Sales in 2019 and has a growth of 45 percent in five years.
  • EBITDA represents 44 percent of Sales.
  • Market capitalization grew 27 percent from 2018 to 2019 YTD.
  • Market capitalization was erratic in movement in the last five years.
  • Intrinsic value grew 140 percent from 2018 to 2019.
  • Intrinsic value is greater by 350 percent against market capitalization.

Interpretation

ICTSI was profitable,its bottomline increases year-over-year from 2015 to 2019. The management had generated sufficient revenue for its business operation from 2014 to 2019.

 

4. ICTSI FINANCIAL RATIOS

ICTSI FINANCIAL RATIOS

2014 2015 2016 2017 2018 2019
Asset Turnover (average) 0.36 0.32 0.30 0.32 0.33 0.32
Return on Asset (ROA) % 4.71 0.60 3.33 3.29 4.88 5.27
Return on Equity (ROE) % 11.90 1.44 8.11 8.44 11.75 14.72
Financial Leverage (average) 2.58 2.29 2.57 2.56 2.28 3.55
Return on Invested Capital % 9.27 3.15 6.86 7.05 9.19 9.11
Interest Coverage 3.53 2.21 3.35 2.86 3.22 3.64
Earnings per Share USD 0.07 0.01 0.07 0.07 0.07 0.10

Facts:

  • Asset turnover was averaging 0.32 in 2019.
  • Return on assets were 5.27 percent in 2019.
  • Return on equity was 14.72 percent in 2019.
  • Financial leverage was averaging 3.55 in 2019.
  • Return on invested capital was 9.11 percent in 2019.
  • Interest coverage was 3.64 in 2019.
  • Earnings per share was $0.10 in 2019.

Explanation:

  • Asset turnover indicates that the company generates 32 cents of sales for every one dollar invested in assets.
  • Return on assets ratio indicates that the company generated 5.27 cents of net income for every dollar invested in assets.
  • Return on equity indicates that ICTSI generated 14.72 cents of net earnings for every dollar of shareholders equity.
  • Financial leverage ratio indicates that for every dollar in equity ICTSI has $3.55 in total assets. The other $2.55 was borrowed. The company is not considered a highly leveraged. The formula used in this ratio was total assets and not total debt against equity. 
  • Return on invested capital indicates that 9.11 percent is the return that ICTSI makes over its invested capital. Invested capital is the total long-term debt plus equity.
  • Interest coverage tells us that the company is making more than enough for current interest rates which is 3.64 times over.
  • Earnings per share indicates that $0.10 is the amount that the company will distribute to its shareholders for each share of stock.

Interpretation

The financial ratios of ICTSI tells us that the operation of the business is managed efficiently and the company is profitable.

 

5. ICTSI KEY EXECUTIVES

LIST OF EXECUTIVES
NAME TITLE
Enrique K. Razon Jr. Chairman & President
Rafael D. Consing Jr. SVP/CFO/Compliance Officer
Christian Martin Razon Gonzalez SVP/Head Global Corporate
Andrew James Dawes SVP/Head Asia Pacific
Anders Kjeldsen SVP/Head Latin America
Hans-Ole Madsen SVP/Head Europe, Middle East and Africa
Jose Joel M Sebastian SVP, Finance
Brian Mark Hibbert VP/Chief Information Officer
Humberto Godfried Wieske SVP, Head of Global Commercial
Gigi Iluminada T. Miguel VP/Treasurer
Vivien F. Minana VP/Senior Administration Officer
Caroline C. Causon VP/Head Financial Planning and Budgeting
Michael Robin Cruickshanks VP/ Head Global Corporate HR
Johan Swart VP/Head Global Engineering Equipment Maintenance
Tricianne M. Zingapan VP/Head Global Corporate Audit and Compliance
Sandy A. Alipio VP/Bus Process/Chief Risk Officer
Arthur R. Tabuena Director Treasury/Head HR
Rafael T. Durian Secretary
Benjamin M Gorospe III Assistant Secretary

Explanation:

The compensation of the above executives are not revealed in the companies financial statements.

 

6. ICTSI LOBBYING AND CONTRIBUTIONS

ICTSI LOBBYING AND CONTRIBUTIONS

LOBBYING AND CONTRIBUTIONS

Period USD
2017 20,000
2016 20,000
2015 50,000

Facts:

  • Lobbying and contributions were $20,000 in 2017.
  • Lobbying and contributions were $20,000 in 2016.
  • Lobbying and contributions were $50,000 in 2015.

Explanation

  • Lobbying and contributions represents 0.01 percent of net income in 2017.
  • Lobbying and contributions represents 0.01 percent of net income in 2016.
  • Lobbying and contributions represents 0.09 percent of net income in 2015.

Interpretation 

The lobbying and contributions incurred by the company is very minimal against its net income from 2015 to 2017. There was no lobbying in 2018.

 

7. ICTSI FINANCIAL STRENGTH

ICTSI FINANCIAL STRENGTH

DATA

USD
Working capital 235,000,000
Total assets 4,702,932,267
Sales 1,626,752,208
EBIT 516,195,942
Market value of equity 4,867,000,000
Book value of total liabilities 2,639,236,339
Retained earnings 882,814,174

CALCULATIONS

Ratio Score Result
A – Working Capital / Total Assets 0.05 1.20 0.06
B – Retained Earnings / Total Assets 0.19 1.40 0.26
C – EBIT / Total Assets 0.11 3.30 0.36
D – Market Value of Equity / Book Value of Total Liabilities 1.84 0.60 1.11
E – Sales / Total Assets 0.35 1.0 0.35
Z-Score     2.14

 

Formula: Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

 

Explanation

Z-Score is a statistical measurement that compare data points from different sets of data to find correlations. This measurement by Dr. Edward Altman is a significant measure in determining the financial strength of the company because it relies on different weighted financial liquidity and profitability metrics to come up with the overall score. This measure indicates the probability of bankruptcy.

Interpretation

ICTSI had a calculated Z-Score of 2.14. According to Dr. Altman, a grading scale of 1.8 to 3.0 indicates the company is likely to declare bankruptcy. In other words, the company might be might be having difficulty with its finances. Although, financial statement tells us that the company is profitable and liquid, however, performing Dr. Altman’s approach in determining the financial strength of the company the result is not favorable hence, it relies on a number of different metrics.

There are four main categories in the calculation of Z-Score namely, the profitability or the return on investment, liquidity, leverage and the operating or efficiency. Hence this calculation relies on different metrics this is a significant measure in determining the financial strength of the company.

 

CITATION

https://www.ictsi.com/

https://www.ictsi.com/leadership-team

 

Researched and written by Criselda

Twitter: criseldarome

Note:

Research Reports can be found under the company tab.