KUALA LUMPUR (Nov 9): Swift Haulage Bhd's share price hit a 14-month high of 61.5 sen in Thursday morning trade, after its net profit for the third quarter ended Sept 30, 2023 (3QFY2023) more than doubled to RM28.39 million.
At the time of writing, the stock pared some gains to settle at 57.5 sen, up 2.5 sen or 4.55 sen from its closing price of 55 sen on Wednesday (Nov 8), giving it a market capitalisation of RM511.66 million.
The stock was the second most-traded stock on Bursa Malaysia, with 51.15 million shares changing hands, almost 17 times its 200-day trading average of 3.06 million shares.
On Wednesday (Nov 8), the integrated logistics player attributed the huge improvement to its net profit to higher other income earned from gain from bargain purchase through the acquisition of a 17.5% stake in Global Vision Logistics Sdn Bhd (GVL).
In a note on Thursday, Maybank Investment Bank said Swift Haulage's core net profit, which it computed at RM18.3 million for the nine months ended Sept 30, 2023 (9MFY2023), only met 54% of its forecast.
"The key variance came from overhead costs from recent business expansion and ESOS (employee share option scheme). However, we are keeping our forecasts, as we await guidance in an upcoming results briefing.
"4Q is always seasonally stronger, coupled with the normalisation of overhead costs post-business streamlining," it said, adding that it maintained its "hold" rating and target price of 52 sen, based on seven times FY2024 enterprise value/earnings before income tax, depreciation and amortisation (EV/Ebitda), in line with the five-year historical mean of its peers.
"We remain cautious on Swift's outlook, following five consecutive quarters of earnings misses. Although we anticipate growth in its warehousing and container depot segments due to recent capacity expansions, the uptake rate may be slow.
"The container haulage and freight forwarding segments are being negatively impacted by macroeconomic headwinds, posing downward risks to the rates and volume handled. Having said that, we believe its depressed share price has largely reflected the headwinds."
Meanwhile, Kenanga Research said Swift Haulage's 9MFY2023 core net profit, which it calculated as RM35 million, met its expectation at 70% of its full-year forecast. It also maintained its "outperform" call and target price of 63 sen, which is based on an unchanged FY2024 price-earnings ratio of 10 times, which is in line with local logsitics players.
"We like Swift for: (i) its leading position in the Malaysian haulage market, commanding close to 10% share; (ii) its value-adding integrated offerings, resulting in a superior pre-tax profit margin of circa 10% compared to the industry average of 4%; and (iii) the tremendous growth potential of its warehousing business, riding on the booming domestic ecommerce," it said.
Apex Securities Bhd, meanwhile, said Swift Haulage's core net profit of RM22.8 million missed expectations as it only met 50% of its estimates. Its lower core profit was due to higher finance and overhead costs from business expansion.
The research firm reduced Swift Haulage's core earnings forecast by 22.8% and 15.7% for FY2023 (RM35.4 million) and FY2024 (RM48.8 million), to account for the lower-than-expected margins and higher costs.
Apex Securities maintained its "buy" call for Swift Haulage but lowered its target price to 71 sen, after downgrading its earnings.
"Multiple headwinds such as rising costs on labour, finance and fuels, as well as declining freight rates, may continue to hamper growth prospects. However, we reckon that domestically-driven logistic players with exposure to domestic logistic, warehousing and cold-chain will outperform, supported [by] domestic economic growth.
"We opine [that] near-term Swift [Haulage]’s outlook remains challenging, attributed to higher operating and finance cost from ongoing capacity expansions. However, we are optimistic on the group’s development in the long run for its growing market share and leading position in [the] domestic logistic business," the research firm said.