By Isa Jane D. Acabal, Researcher

Shares of International Container Terminal Services, Inc. (ICTSI) climbed last week after the company's Mexican unit secured approval to handle larger container vessels, with analysts pointing to the expansion, strong earnings, and the weaker peso as factors supporting the stock.

Data from the Philippine Stock Exchange (PSE) showed ICTSI was the most actively traded stock from Sept. 1 to 4, with 5.15 million shares worth P4.84 billion changing hands.

The stock closed at P934.50 apiece on Friday, up 5.6% from P885 a week earlier, outpacing the services sector's 4.2% gain and the benchmark PSE index's (PSEi) 2.3% increase. Year to date, ICTSI shares have risen 64.8%, exceeding the services sector's 37.1% gain and the PSEi's 0.6% advance.

Juan Alfonso G. Teodoro, an equity trader at Timson Securities, Inc., said the capacity expansion of ICTSI's Mexican unit, Contecon Manzanillo S.A. de C.V. (CMSA), strengthened investor confidence in the company's growth outlook.

"Any international news related to business expansion is usually a positive catalyst for the stock because it shows that the company is growing its operations and looking for more opportunities outside the Philippines," he said in a Viber message.

The expansion abroad is in line with ICTSI's business model: the Razon-led port operator runs terminals in multiple countries across Asia-Pacific, the Americas, Europe, the Middle East, and Africa, which is why developments such as the peso's weakness and overseas capacity upgrades feature prominently in how analysts view the stock.

In a statement on Aug. 31, the company said CMSA had been cleared to accommodate ships with drafts of up to 15.5 meters. The approval allows CMSA to serve vessels up to 400 meters long, including ultra-large container vessels capable of carrying up to 24,000 twenty-foot equivalent units (TEUs), making it the only terminal operator at the Port of Manzanillo with such capability, ICTSI said. Manzanillo is one of Mexico's principal container gateways on its Pacific coast, handling a large share of the country's containerized trade, so the ability to berth the largest vessels in the global fleet positions the terminal to compete for major trans-Pacific and transshipment services.

José Antonio Contreras, CMSA chief executive officer, said the approval "expands our ability to serve larger ships and supports the next stage of the terminal's development."

Jash Matthew M. Baylon, an equity trader at The First Resources Management and Securities Corp., said the upgrade boosted investor confidence by increasing the terminal's capacity to handle larger ships and higher volumes.

"The expansion plan boosted investor confidence, as the upgraded facility can cater to larger ships and handle higher volumes, translating to higher potential earnings moving forward," he said in a Viber message.

The PSE on Sept. 1 also held a ceremony recognizing ICTSI as the first domestic listed company to reach a P2-trillion market capitalization.

"This was another positive catalyst for ICT because reaching P2 trillion in market value shows that investors have strong confidence in the company," Mr. Teodoro said. "Being the first local listed company to reach that level also gives ICT more attention and makes the stock look stronger in the market," he added.

Mr. Baylon said the milestone highlighted "strong investor bullishness."

"Despite ongoing geopolitical turmoil that continues to hamper supply chains, ICTSI's port operations remain robust. The firm's ability to expand demonstrates a long-term commitment that further attracts investors," he said.

Analysts also cited ICTSI's earnings growth and the peso's weakness against the dollar as supporting factors. Because ICTSI reports its results in dollars while many of its shareholders and costs are peso-based, currency movements directly shape how its earnings are seen in the local market.

"ICTSI is a dollar earner so weak peso is very positive for earnings," Cristina S. Ulang, first vice-president and head of research at First Metro Investment Corp., said in a Viber message.

"The firm's operations abroad, which earn in dollars, could hedge ICTSI's performance by generating favorable foreign exchange gains," Mr. Baylon said. "In addition, last week's strong rebound was driven by accumulation and bargain hunting as ICTSI traded near its support level of P870 per share, in confluence with its 100-day exponential moving average (EMA)," he added.

ICTSI's attributable net income rose 21.9% to $589.98 million in the first half from $483.84 million a year earlier. Gross revenue increased by 27.1% to $1.92 billion from $1.51 billion.

Mr. Teodoro said investors should monitor the company's earnings and cargo volumes in the coming weeks.

"It will also be important to see how its international operations perform and if the company announces more expansion plans. Overall, investors should look for signs that the company's strong growth is continuing," he said.

Mr. Baylon said developments in the Middle East and their impact on oil prices should also be monitored.

"These factors could affect the local economy and weigh negatively on market sentiment as a whole," he said.

Ms. Ulang said investors should monitor government policy measures aimed at supporting economic growth through infrastructure spending and financial assistance. She placed ICTSI's support at P850 and resistance at P1,000.

Mr. Teodoro pegged support at P850 to P900 and resistance at P950 to P1,000. Mr. Baylon placed support at P870 and resistance at P1,050.