Swift Haulage Berhad - 1QFY25 In Line; Consolidation year amid margin pressures
Fri, 16-May-2025 06:34 am
by Jayden Tan • Apex Research

Counter

SWIFT (5303)

Target Price (RM)

0.39

Recommendation

Hold

  • Swift Haulage reported 1QFY25 core net profit of RM7.2m, in line with expectations. CNP declined 12.4% yoy, but rose 17.9% qoq.

  • No change to FY25F/FY26F earnings forecasts as we continue to view FY25 as a consolidation year for SWIFT to navigate margin pressures.

  • Reiterate HOLD with lower TP of RM0.39, based on a revised 8x PER (from 9x) on FY25F EPS, reflecting the stock’s lower 3-year average valuation and broader sector de-rating amid weak sentiment.

 

Results meet expectations. 1QFY25 CNP of RM7.2m came in within expectations, accounting for 24% and 23% of our in-house and consensus full-year forecasts, respectively.

 

YoY. CNP declined 12.4% yoy from RM8.3m, despite a 3.5% yoy increase in revenue. The decline in profitability was mainly due to higher operating costs and increased finance expenses (RM9.3m vs RM8.6m). Nevertheless, growth in the freight forwarding segment (PBT +63.2% yoy) helped cushion the weakness in the land transportation and container haulage segments, where margins remain under pressure.

 

QoQ. CNP rose 17.9% qoq, despite flattish revenue, supported by stronger contribution from the freight forwarding segment, which offset the softer performance in the container haulage division.

 

Outlook. We view FY25 as a consolidation year for Swift Haulage, as the Group continues to navigate operating under margin pressures from expansion-related operational costs, intensifying competition, and higher borrowing expenses. That said, the warehousing segment remains a bright spot, with contributions commencing from new capacity tied to tenancy commencements in Westport and Penang. Additionally, the Shah Alam International Logistics Hub Phase 1 and the cold chain facility under JV with JWD, both slated for completion by end-2025, are expected to contribute meaningfully in the next financial year.

 

Earnings Revision. Our earnings forecasts for FY25F and FY26F remain unchanged.

 

Valuation. We reiterate our HOLD recommendation on Swift Haulage with lower target price of RM0.39 (from RM0.44) by applying a lower PER of 8x (from 9x) to FY25F EPS, reflecting the stock’s declining 3-year historical average and the broader de-rating trend across the sector amid weakened investor sentiment and broader sector headwinds.

 

Risk. Further margin erosion could result from fierce price competition and elevated cost pressures, alongside rising depreciation and finance costs tied to capacity expansion.

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