Swift has positioned itself as a highly competitive integrated logistics provider with over 20 years’ experience in handling container haulage, land transportation, warehousing and freight forwarding at main ports in Peninsular Malaysia.
We expect Swift core profit to grow at a 3-year CAGR of 16% (FY21- FY24) on the back of stronger contribution across all business segments amid the easing of travel restriction and economic recovery. Besides, we foresee continuous business expansion in line with management’s long term strategic plans to venture into new services, the cold-chain logistics services, additional warehouses facilities, and purchasing of new prime movers – a push for earnings growth in the future.
Management is committed to reward up to 30% of net profit as dividend to shareholders. Assuming a 30% dividend payout ratio, we expect Swift to declare 1.91 sen/ 2.13 sen/ 2.41 sen dividend per share for 2022F/ 2023F/2023F respectively, translating into a 3.8% - 4.8% yield at current price level.
We initiate coverage on Swift with a BUY call at a TP of RM0.71, pegged at 10x PER to 7.1 sen FY23 EPS. Our valuation is derived based on 1-SD below mean historical average forward PER of sector peers, in view of prolonged supply chain disruption and inflation risk. On the same beat, Swift deserves to trade at a higher valuation given that the stock is currently trading at 8x forward PER versus its average of 10- 11x.
Source: BIMB Securities Research - 30 Jun 2022