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A conservative ICT (International Container Terminal Services, Inc.) cashes out treasury shares to fortify further its finances creating a buying opportunity

Despite the pandemic slowing economic activities everywhere, international port operator International Container Terminal Services, Inc. (ICT) is able to maintain its revenue level.  ICT generates revenue for the nine-month period ending September 30, 2020 of US$1.1 Billion.  The said revenue is at par with last year’s.

ICT exhibiting resiliency against the ongoing pandemic has sent its shares at pre-pandemic level.  ICT has taken advantage of its share price recovering to a pre-pandemic level to raise more capital.  ICT doesn’t have to raise more capital but despite such fact took advantage of its share price recovery to pre-pandemic level.  The move is a testament to the conservatism of ICT’s management.

ICT’s financial discipline allowed it to lower operating expenses by US$11.3 Million.  The lower operating expenses allowed ICT to improve by 2% its net income to US$210.4 Million. For the nine-month period of 2020 ICT generated cash from operations of US$568.8 Million. Although ICT generated more cash from operations as compared to last year of the same period, it limited its spending for investment and capital expenditures to just US$154 Million. This allowed ICT to leave more cash generated from operations for dividend distributions and debt payments. ICT could have used the free cash flows for debt repayment but instead preferred to refinance debts at lower rates. Thus, allowing ICT to boost its cash balance to US$567.6 Million.  The cash balance is an increase of US$332.7 Million from the cash balance at the start of the year.

The release of the 40 Million ICT treasury shares at 117 a share has raised additional cash of US$97.20 Million to ICT.  The price of the treasury shares is well above its cost.  As of September 30, 2020, total cost of ICT treasury shares amounted to US$79.6 Million. After the sale ICT will still be holding 2,406,962 treasury shares.

The release of the 40 Million treasury shares may have caused ICT share price to dip by 9.45% during the past five days.  A 40 Million chunk is a massive volume. That volume flooding the market can really cause a share price decline and that share price decline is a buying opportunity.  

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Disclaimer and Disclosure: This analysis is an independent viewpoint on publicly traded stocks in the Philippine market.  Accuretti Systems Inc. trades stocks in the Philippine market.

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