Results inline; maintain HOLD

Swift’s 1H24 core net profit (CNP) of MYR15.7m met our expectation but fell short of consensus, representing 39%/36% of full-year estimates, respectively. We maintain our earnings forecasts and TP of MYR0.51, based on 7.0x FY24E EV/EBITDA, in line with the 5Y peer average. Maintain HOLD. We expect a stronger 2H24, driven by seasonal factors and increased contributions from the recently acquired 118k sq ft Penang warehouse (acquisition completed in Aug 2024) and Tebrau warehouse, where utilisation is expected to rise to c.80% from the current c.50% with a new FMCG customer commencing operations in late 3Q24.

Lower EBIT and finance costs dragged 1H24 earnings

1H24 CNP (ex-MYR14m in one-off gain from the sale of Global Vision Logistics’ shares) declined 3% YoY to MYR15.7m despite a 7% revenue increase. The weaker YoY CNP was mainly due to lower operating profit across all segments except W&CD, along with higher finance costs. Revenue growth was mainly driven by the LT (+9% YoY) and W&CD (+17% YoY) operations, boosted by new capacity.

QoQ, all segments declined except W&CD

QoQ, 2Q24 CNP fell 7% due to a 4% decline in revenue. Operating profits declined across all segments except W&CD, which saw a 4% QoQ increase in EBIT, likely driven by improved utilisation rates in 2Q24.

Cautious outlook despite W&CD expansions

We remain cautious on the group’s outlook. While we anticipate growth in its W&CD segment due to recent capacity expansion, uptake rates may be slow. 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.

Source: Maybank Research - 12 Aug 2024