KUALA LUMPUR (Jan 8): Swift Energy Technology Bhd (KL:SET), listed on Wednesday, has already attracted the attention of two analysts projecting sharp earnings growth for the industrial services firm.
Earnings growth would be “explosive” at 12% for the year ending Sept 30, 2025 (FY2025) and 29% in FY2026, from a renewed spending spree by long-standing client Wilmar International Ltd, Kenanga Investment Bank flagged in initiating coverage with an ‘outperform’ call and target price of 60 sen.
Swift Energy is “positioned at the heart of this upswing”, as Wilmar’s capital expenditure for plants and machinery retrofitting could triple from the cusp of a new four-year cycle, Kenanga said.
Wilmar’s spending on retrofitting has contributed 13%-24% of Swift Energy’s revenue since 2021, and the capital expenditure historically follows a three-year boom-and-bust cycle with the last peak in 2020, the house noted.
Providing industrial automation and power systems, Swift Energy made its debut on Wednesday on the ACE Market with a 29% premium to its initial public offering (IPO) price. The company’s IPO grossed RM84.07 million on the back of strong investor demand.
Investors snapped up its shares during IPO, with the public tranche oversubscribed by more than 58 times. Shares set aside for eligible persons and Bumiputera investors were fully subscribed. Private placements of both new and existing shares to select investors were also fully taken up.
Tradeview Research, meanwhile, started Swift Energy on a ‘buy’ call and a target price of 43 sen.
The research house pointed out that Swift Energy stood out as the only certified manufacturer of explosion-proof solar photovoltaic modules from Malaysia among six globally. Swift Energy’s systems are found on oil and gas platforms.
The company also manufactures power distribution panels under Siemens' SIVACON brand and its own "Swift Energy" brand. “This strategy bolsters its market position by leveraging in-house fabrication for higher margins and brand expansion,” Tradeview said.
Revenue could grow 24%-26% in FY2025-FY2027 driven by better order book replenishment, according to Tradeview’s forecast.
Profit margins from the two main segments — solar and power distribution systems which together account for more than half of its revenue — would improve from economies of scale, a better product mix, and more contracts.
Swift Energy has set aside RM28 million out of the total IPO proceeds for the expansion of its fabrication facility, storage, and office, and the establishment of a new research and development centre in Shah Alam.
The company will also utilise RM2.20 million to buy new machinery, equipment and software, RM4.03 million for business expansion, RM15 million to repay borrowings, RM13.35 million for working capital, and RM1.48 million for another dedicated research and development centre.