• Overview. Swift Haulage Berhad (Swift) revenue grew by 11% YoY while core PATAMI soared by 37.7% YoY in 2Q22 driven by i) full economic reopening from endemic phase which translated into higher business volumes for the quarter, ii) lower effective tax rate contributed by investment tax allowance and reversal of deferred tax liability due to disposal of property. On QoQ basis, core PATAMI dropped slightly or by 1.5% due to lower sales volume from container haulage segment.

• Key highlights. Land transportation segment accounted for 34% of total revenue and was the main contributor to higher revenue in 2Q22 which jumped by 2% QoQ and 30% YoY. Freight forwarding segment PBT of RM9.4m was the largest contributor to bottom line following margin that surged higher to 54.6% (+5.2 ppts QoQ, + 17.9 ppts YoY) thanks to the recovery in international freight rates.

• Against estimates: Inline. 1H22 core PATAMI of RM25.8m (38.5% YoY) came in within our/ consensus full year forecast at 47%/ 45%.

• Dividend. Declared DPS of 1.0 sen during the quarter. We estimate a total FYE22 DPS of 1.9 sen (c.30% payout), translating into a DY of 3.2%.

• Outlook. Moving forward, earnings will be lifted by recovery in domestic economic activities and healthy external trade growth. The group will continue to focus on expanding its customer base with concurrent expansion of warehouse capacity which will increase by 46% in FY22. The expansion of warehouse capacity is expected to contribute positively to Swift’s financial performance – further adding to the group’s synergy in land transportation and haulage business.

• Our call. Maintain a BUY call on Swift with unchanged TP of RM0.71, pegged at 10x PER to 7.1 sen FY23 EPS. We continue to like Swift due to its dominant player in the haulage business (10% of Malaysia market share), above peers and industry average profit margins as well as its strong drive to implement the ESG initiatives.

Source: BIMB Securities Research - 18 Aug 2022