Maybank IB Research remains cautious on the group’s outlook.
PETALING JAYA: Swift Haulage Bhd
is likely to see a stronger quarter ahead, despite a 35% year-on-year (y-o-y) drop in core net profit for the first nine months of financial year 2024 (9M24) due to higher costs.
Kenanga Research noted that the logistics company’s 9M24 core net profit met its expectation, despite the sharp fall caused by startup costs for a new warehouse and the loss of operational scale arising from global shipping disruptions.
“We expect a stronger quarter ahead as port congestion has eased, (coupled with) the usual year-end festivities and, to a certain extent, container volume frontloading activities due to potential US trade tariff hikes on China.”
The research house has maintained its forecasts, target price of 50 sen and a “market perform” call.
The brokerage highlighted that Swift Haulage had completed the expansion of its warehouses in Tebrau, Seberang Prai, Pulau Indah and Port Klang Free Zone, as well as its cold chain warehouse in Sabah.
The company also completed its Westports on-dock depot and warehouse, as well as commenced warehouse management and transportation services in Pengerang for Petroliam Nasional Bhd.
“We expect it to further its expansion in the northern region due to the recent jump in foreign direct investment there,” the research house added.
Kenanga Research also noted that the company’s ongoing expansion plan includes the biggest green logistics hub in Asia (outside China) under its 30%-associate Global Vision Logistics Sdn Bhd.
The work on the hub is on track and expected to contribute earnings to the company starting in the fourth quarter of next year.
The brokerage liked Swift for its leading position in the Malaysian haulage market, commanding close to a 10% share; its value-adding integrated offerings resulting in a superior pre-tax profit margin of around 7%, compared to the industry average of 4%; and the tremendous growth potential of its warehousing business, riding on the booming domestic eCommerce.
“However, we believe the current market valuations have fully reflected its fundamentals,” the brokerage added.
The risks to its call include sustained high fuel cost, global recession hurting the demand for transportation service and delays in the company’s warehousing expansion plans.
Meanwhile, Maybank Investment Bank (Maybank IB) Research remained cautious on the group’s outlook.
Uptake rates may be slower than expected, depending on the market conditions, the research house said.
It added that the group faces pressure from steep competition, posing downward risks to rates and volume handled.
“However, we believe its depressed share price largely reflects these headwinds,” Maybank IB Research concluded.
