Making its debut on the Ace Market today, Swift Haulage Bhd (Swift) is an integrated logistics service provider with services comprising container haulage, land transportation, warehousing, container depot and freight forwarding. Amid the positive industry outlook and Swift’s aggressive expansion plan, we expect Swift to register net profit of RM47.4m and RM65.8m for FY21 and FY22 respectively. BUY with a target price of RM1.18 based on 16x PER FY22 (in line with its peers’ CY22 PER), premised on capacity expansion, higher profit margin compared to its peers, growing demand from its existing customers and the positive future of e-commerce.

The group provides its customers one stop logistics solutions. Its integrated logistics operations are supported by its fleet operations in Malaysia and Thailand including 1,546 prime movers, 5,518 container trailers, 811 box or curtain-sider trailers, 53 trucks and 42 CNG tankers. The group operates warehouses with a total storage capacity of 849,371 sq. ft. and container depots with total capacity of 28,500 TEU. Its vast coverage of main seaports in Peninsular Malaysia for container haulage provides Swift the platform to support its customers’ needs and growing its container haulage business further. With 10 years track record in logistics industry, Swift has built long clientele business relationships and accumulated a total of 1,809 customers from different industries which serves as a reference and platform to grow its business.

Going forward, Swift is focusing on capacity expansion with its IPO proceeds as well as cross-selling efforts to grow its business. Of the RM161.9m IPO proceeds raised, RM28.6m will be utilised on the construction of new warehouse on last piece of empty land in Port Klang Free Zone for 178,000 sq. ft. of floor storage and racking space. Due to current peaked utilisation and growing demand in inventory storage from its customers, this will expand the group’s total capacity by 376,900 sq. ft. in FY22 (together with the extension of Tebrau warehouse and Seberang Prai warehouse). The group also intends to purchase Bandar Sultan Sulaiman land with its proceeds of RM41.6m to expand existing container haulage or land transportation yards, and warehousing and container depot capacity. RM12m from its IPO proceeds will be used to purchase new prime movers for its business operations in Malaysia throughout CY22 with the aim of expanding its commercial vehicle fleet.

The management expects the group to have sizeable cross-selling potential where its enlarged capacity for container haulage, transportation and warehousing will enable it to cross-sell more services to 80-90% of its customers. The Group also commits to rent 500,000 sqft. of land area to cater for future of e-commerce’ logistics requirements.

Swift’s financial leverage is manageable with net gearing ratio of 0.8x post IPO. The group has also imposed a dividend policy of up to 30% payout, as such we forecasted dividend yield to be around 2% for both FY21 and FY22.

Source: Rakuten Research - 21 Dec 2021