Swift Haulage Bhd (Swift) is principally involved in the provision of integrated logistics services comprising container haulage, land transportation, warehousing and freight forwarding agency services. The group’s integrated logistics and headquarters are located in Malaysia, while its operations in Thailand are focused on cross-border transportation and freight forwarding. 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 sqft and container depots with total capacity of 28,500 TEU.

Moving forward, Swift’s business strategy is to focus on leveraging its core competencies and strengths in integrated logistics to address business opportunities and grow its business, via strengthening and expanding its operational facilities including warehousing and container depot as well as expanding its fleet operations.

We derive a fair value of RM1.16 based on 14.0x PE multiple to its FY23F EPS of 8.3sen. The IPO is expected to raise approximately RM161.8m from the issuance of 157.1m new shares. Bulks of the proceeds are for capital expenditure and repayment of borrowing, utilizing 50.7% and 43.1% of the proceeds respectively.

• Growth drivers. Swift’s growth will be dependent on successful implementation of its business strategies and future plans which entails: i) construction of a new warehouse, ii) purchase of land, iii) acquisition of cold chain logistics companies, and iv) expansion of vehicle fleet.

• Competitive strengths. Swift’s competitive strengths include: i) comprehensive coverage of the main seaports in Peninsula Malaysia for container haulage, ii) able to provide convenient one-stop logistics solution, iii) own and operate its fleet of commercial vehicles which enables control and customization to meet customers’ needs, iv) cost and service advantage from its in-house supporting services, and v) 10 years track record.

• Catalysts. Key drivers may include: i) rapid growth of E-commerce, ii) adoption of tech by integrated logistics, and iii) talks of free trade pact with EU re-starting.

• Key risks. Key downside risks, among others, include i) competition from large number of operators in the industry, ii) shortage of drivers, iii) deterioration of Covid-19 pandemic, iv) threat of cargo hijacking and theft incident, v) an increase in diesel prices which may reduce profitability, vi) fluctuations in interest rates, and vii) dependence on its customers’ business performance.

Source: PublicInvest Research - 6 Dec 2021