• Swift Haulage Berhad (Swift) announced yesterday that it has entered into a Memorandum of Understanding (MoU) with Volvo Malaysia Sdn Bhd (Volvo) for the purchase of electric vehicle (EV) trucks, explore the potential charging network, develop qualified human capital development and technology sharing for electro mobility in Malaysia.

• We are positive on this move given the management’s commitment to reduce its carbon emission and its subsequent impact on transportation and logistics business towards the environment.

• We maintain our BUY call on Swift at a TP of RM0.71, pegged at 10x PER to 7.1 sen FY23 EPS.

Embarking into the EV Journey

Swift yesterday announced that it has entered into a Memorandum of Understanding (MoU) with Volvo Malaysia Sdn Bhd (Volvo) for the purchase of electric vehicle (EV) trucks, explore the potential charging network, develop qualified human capital development and technology sharing for electro mobility in Malaysia. The MoU marks another milestone in Swift’s electric mobility journey – highlighting its dedication towards achieving the company’s sustainable environment targets to reduce overall carbon emissions in the long run.

Towards a Better Carbon Emission Control

We are positive on the management’s commitment to reduce its carbon emission given the significant impact on transportation and logistics business towards the environment. On the same vein, the management also hopes to convert the entire Swift’s fleet to electrical trucks over the longer term to improve operational efficiency and effectiveness while reducing carbon emissions. According to the US Department of Energy, EVs convert over 77% of electrical energy from the grid to power the wheels, which are far more efficient than conventional gasoline vehicles which only convert about 12% - 30% of energy stored in gasoline to power the wheels.

To recap, in 2021, Swift owned 1,487 prime movers, 6,241 cargo trailers, 56 trucks, and 42 compressed natural gas tankers. Note that, Swift recorded a 12% increase in carbon emission in 2021 to 116,648 tCO2e (Table 1) due to the reopening of economic activities following higher number of prime movers deployed.

Maintain a ‘BUY’ call at a TP of RM0.71

We maintain a BUY call on Swift at a TP of RM0.71, pegged at 10x PER to 7.1 sen FY23 EPS.

Source: BIMB Securities Research - 16 Aug 2022