Swift Haulage Berhad - Securing a Foothold in the Singapore Market

Date: 
2022-08-11
Firm: 
BIMB
Stock: 
Price Target: 
0.71
Price Call: 
BUY
Last Price: 
0.495
Upside/Downside: 
+0.215 (43.43%)
  • Swift Haulage Berhad (Swift) announced on 10th August that it has entered into a Binding Offer (BO) with DLT Enterprise Pte. Ltd. to acquire the entire interest in Watt Wah Petroleum Haulage Pte. Ltd. for a total purchase consideration by way of a cash payment of SGD1.6mn (approximately RM5.2mn).
  • This acquisition is one of Swift’s strategic moves to strengthen further its primary business within the container haulage while complementing its inland distribution, cross-border, and freight forwarding segments in Singapore
  • We are positive on the announcement as this would provide a brighter business prospect for the company in the long run. However, we make no change to earnings estimate at this juncture pending more details of the Acquisition Agreement.
  • We maintain our BUY call on Swift at a TP of RM0.71, pegged at 10x PER to 7.1 sen FY23 EPS.

Entered into Binding Offer to Acquire the Entire Stake of ‘Watt Wah’

Swift recently announced that it has entered into a Binding Offer (BO) with DLT Enterprise Pte. Ltd. for the purpose of acquisition of the entire interest in Watt Wah Petroleum Haulage Pte. Ltd. (Watt Wah) for a total purchase consideration by way of cash payment of SGD1.6mn (approximately RM5.2mn). Note that as of 31st Mar 2022, Swift’s cash & bank balances stood at RM36mn. As a part of the acquisition agreement, Swift is obliged to repay the shareholder’s loan of SGB8.5m (approximately RM27.7m) in full by refinancing the loan within 2 weeks of the completion date (yet to finalise).

Securing a Foothold in the Singapore Market

This acquisition is one of Swift’s strategic moves to strengthen further its primary business within the container haulage while complementing its inland distribution, cross-border, and freight forwarding segments in Singapore given Watt Wah expertise and over 20 years of experience in oil and gas logistic services, serving all the oil majors as well as commercial customers.

Positive on the Announcement, but No Change to Earnings Estimate

We are positive on the announcement as this would provide a brighter business prospect for the company in the long run. However, we make no change to earnings estimate at this juncture pending more details of the Acquisition Agreement.

Maintain a ‘BUY’ call at a TP of RM0.71

We maintain our BUY call on Swift at a TP of RM0.71, pegged at 10x PER to 7.1 sen FY23 EPS.

Source: BIMB Securities Research - 11 Aug 2022

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