Swift Haulage results largely in line with analyst expectations

PETALING JAYA: The strong financial performance of Swift Haulage Bhd is reinforcing analysts’ optimism over the underlying strength of the integrated logistics service provider.

Kenanga Research, for one, maintained its “outperform” call on Swift Haulage with an unchanged target price of RM1.01, based on 14 times price-earnings (PE) for the financial year ending Dec 31, 2023 (FY23). This was in line with the industry average.

MIDF Research also recommended a “buy” call on Swift Haulage, with a revised target price of RM1.05, compared with RM1.18 previously.

The brokerage lowered its target price for the company after assigning a lower PE of 15 times for FY23, compared with 17 times previously. This is more in line with the sector’s historical mean and after factoring in the risk of a global economic downturn, which could affect port throughput.

Swift Haulage posted a net profit of Rm39.2mil, or 4.42 sen per share, on revenue of Rm479.7mil for the nine-month period to Sept 30, 2022. The results were largely in line with analysts’ expectations.

Kenanga Research noted that Swift Haulage’s encouraging performance was largely driven by the recovery in business activities following the easing of Covid-19 restrictions, while the transportation of petrochemical products, particularly for the Petroleum Nasional Berhad group of companies, was brisk on the back of strong crude oil prices.

Also helping was the strong local gateway volume, riding on robust export volume, the brokerage wrote in its report yesterday.

“We like Swift Haulage for its leading position in the Malaysian haulage business, commanding close to 10% market share, its value-added integrated offerings resulting in a superb pre-tax profit margin of 10%, compared to the industry average of 4%, and the tremendous growth potential of its warehousing business, riding on the domestic ecommerce market,” Kenanga Research said.

MIDF Research projected that in the near term, Swift Haulage could see its earnings uplifted by the 46% increase in total warehouse capacity, following the completion of its expansion programme in the third quarter of FY22.

MIDF Research noted that Swift Haulage’s improved earnings for the nine-month period of FY22, lifted by the post-pandemic recovery, came in within 71% of the brokerage’s estimates and 73% of consensus.

“We leave our earnings estimates unchanged, as the results were within our expectations,” said MIDF Research.

“The key downside risks include lower-than-expected utilisation rates for its new and extended warehouses, as well as lower-than-expected gateway port throughput,” MIDF Research stated.