• Overview. Swift Haulage Berhad (Swift) 3Q22 PATAMI grew by 3% YoY to RM11.7mn driven by full economic reopening which translated into higher business activities in all its segments. However, on QoQ basis, PATAMI dropped by 11% mainly due to lower land transportation and freight forwarding business segments which shaved margin by 0.9 ppts to 6.9%.

• Key highlights. Land transportation revenue fell by 4.4% QoQ due to the absence of festive periods. This is in addition the decrease in revenue from the freight forwarding segment or by 4.8% QoQ mainly due to reducing freight rates in the overall freight market. Other segments like container haulage and warehousing produced an improvement in revenue or by 0.1% and 6.8% QoQ respectively (refer table 2).

• Against estimates: Inline. 9M22 PATAMI of RM39.2mn (16.6% YoY) came in within our/ consensus full year forecast at 71%/72%.

• Outlook. Swift is expected to register a better 4Q22 result performance due to seasonal factor. Moving forward, FY23 earnings will be lifted by recovery in domestic economic activities supported by its expansion plan i.e., addition of 30 new prime movers and ongoing warehouse expansion. Long-term growth remains intact on the back of Global Vision Logistics (GVL) one-stop logistics, warehousing and e-commerce hub (first phase completion expected in 2H2024). Swift’s total warehouse capacity is projected to increase by c.50% in 2024 from end-2022. We also foresee Swift to register a better margin as a result of operational efficiency and higher economies of scale.

• 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 it is a 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 - 15 Nov 2022