Asian Dividend Gems: Asian Terminals Inc

• Backed by DP World (DPW DU), Asian Terminals (ATI PM) is one of the largest owners and operators of ports and related infrastructure in the Philippines.

• We are impressed with the company's excellent financials including consistent profit margins and free cash flow, strong market share, and execution of its business strategies.

• It also trades at cheap valuations with solid dividends and it has also been buying back shares.

Conclusion First

The Philippines is a country (archipelago) with more than 7,100 islands. The cost of logistics accounts for as much as 25 percent of the price of goods in the Philippines. Despite geopolitical instability and higher inflation, the Philippines enjoys excellent long-term prospects including a rising middle class and increasing intra-Asian trade. Asian Terminals is well positioned to capitalize on this trend.

Backed by DP World (DPW DU), Asian Terminals (ATI PM) is one of the largest owners and operators of ports and related infrastructure in the Philippines. We are impressed with the company's excellent financials including consistent profit margins and free cash flow, strong market share, and execution of its business strategies. It also trades at cheap valuations with solid dividends and it has also been buying back shares.

Company Background

Founded in 1986, Asian Terminals (ATI PM) is one of the largest owners and operators of ports and related infrastructure in the Philippines. The company plays a vital role in the country’s trade and logistics sector, handling containerized and non-containerized cargo, bulk shipments, and other terminal services. The port and logistics industry in the Philippines is a vital component of the country’s economy. The Philippines relies heavily on maritime transport for trade, with over 90% of the country’s international trade handled through ports.

ATI began as a government-owned corporation under the Manila International Port Authority but was later privatized. It is now majority-owned by DP World (DPW DU) , a global leader in port operations and logistics. DP World (Dubai-based global ports operator) owns a controlling stake in ATI.

Asian Terminals Inc. (ATI) operates several key ports and terminals in the Philippines, with its primary facilities located in Manila, Batangas, and General Santos. These terminals serve as critical hubs for both domestic and international trade, handling large volumes of containerized and general cargo, as well as providing passenger terminal services. Its flagship terminal, Manila South Harbor (MSH), is one of the busiest ports in the country, while Batangas Port is a key gateway for domestic trade and passenger transport.

ATI provides a range of port-related services, including stevedoring, cargo handling, storage and warehousing, customs clearance support, and logistics and distribution. ATI handles approximately 20-25% of the total container traffic volume in the Philippines. Manila South Harbor alone processes over 1.4 million TEUs annually. It is also a leading player in RoRo and ferry terminal operations. ATI accounts for around 15-20% of the port industry’s total revenue in the country.

In April 2024, the company completed the modernization of Batangas Passenger Terminal, which is now the biggest in the Philippines. The company spent US$25 million to complete this portion of the terminal, doubling the passenger handling capacity of the Batangas Passenger Terminal to 8 million a year. Modernisation is part of a US$90 million investment in the Batangas Port and will position the Batangas Passenger Terminal as the country’s biggest and most modern passenger facility.

Located 110km from Manila, the Batangas Passenger Terminal serves as the country’s largest inter-island hub, connecting mainland Luzon to key island provinces and destinations in Visayas and Mindanao. The Batangas Port also hosts a container terminal primarily serving the Calabarzon region, which accounts for about 15% of Philippine GDP.

DP World became the strategic foreign equity partner of ATI in 2006 and has contributed significantly to the modernisation of the Batangas Port as a fully integrated gateway. Along with the passenger terminal, Batangas Port also has a state-of-the-art container terminal and the Philippines’ biggest car carrier terminal, which accounts for around 80 percent of the country’s annual car importations.