Results miss expectations; lowered forecasts

Swift Haualge’s (Swift) 9M24 core net profit (CNP) of MYR21.7m fell short of both our and consensus expectations, reaching only 53% of full-year estimates. The shortfall was largely due to higher-than-expected costs, likely from lower efficiencies amid capacity expansion. We have revised down our earnings forecasts by -12%/-12%/-11% for FY24E/25E/26E to account for lower margins across all segments and slightly reduced our TP to MYR0.49 (7.0x FY25E EV/EBITDA) from MYR0.51 (7.0x FY24E EV/EBITDA), after rolling forward our valuation base year. Maintain HOLD.

CNP boosted by new capacity

9M24 CNP (ex-MYR15m in one-off gain, mainly from the sale of Global Vision Logistics’ shares) grew by 18% YoY to MYR21.7m, driven by an 8% increase in revenue. The higher YoY CNP was primarily due to improved performance across all segments, partly boosted by new capacity.

Lower QoQ CNP despite increased revenue

QoQ, 3Q24 CNP fell 21% to MYR6.0m despite revenue rose by 6%. Operating profits improved across all segments, except in Land Transport (-12% QoQ to MYR2.7m) and Other segment (MYR5.8m operating losses vs. marginal MYR0.1m operating profit 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 slower than expected, depending on the market conditions. 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 - 14 Nov 2024