MIDF Research in a report yesterday, said it is positive about the disposal.“The proposed disposal unlocks and realises capital appreciation of the land, which forms part of Swift Haulage’s non-core assets, whilst providing a surplus cash flow."
KUALA LUMPUR: Swift Haulage Bhd
’s disposal of a piece of land in Klang, Selangor, for RM38.4mil is expected to provide the company with a cash flow surplus.
MIDF Research in a report yesterday, said it is positive about the disposal.
“The proposed disposal unlocks and realises capital appreciation of the land, which forms part of Swift Haulage’s non-core assets, whilst providing a surplus cash flow.
“Based on a net book value of RM33.4mil as at end-financial year 2021 (FY21), we estimate the one-off gain from the disposal to be approximately RM4.9mil before adjusting for expenses and taxes upon completion.”
MIDF Research said it is maintaining its earnings estimates for Swift Haulage at this juncture, given the non-recurring nature of the transaction.
“However, assuming that the deal is completed by the second quarter of FY23, there could be an upward revision to our FY23 and FY24 earnings estimates, as the group intends to utilise the proceeds for the repayment of borrowings.
“As of the first quarter FY22, the net gearing stood at 0.98-times, while the quarterly cash interest paid was reduced to RM5.9mil.”
The research house said this was following the full utilisation of the RM69.7mil earmarked to repay bank borrowings from the proceeds of its initial public offering.
Swift Haulage’s indirect wholly-owned subsidiary, Sentiasa Hebat Sdn Bhd, entered into a sale and purchase agreement with TPC Land Sdn Bhd to dispose of its 518,364 sq ft land in Bandar Sultan Sulaiman, Klang for RM38.4mil cash.
The proposed disposal is expected to be concluded by the second quarter of FY23.
Kenanga Research said the disposal was done at a “fair price.”
“The transaction values the land at about RM74 per sq ft. In comparison, industrial land parcels in proximity are listed ranging from RM65 per sq ft to RM88 per sq ft.”
The research house said the land is currently used as a container depot yard, which Swift Haulage deems a non-core asset.
“We understand the land is not a prime location for warehousing and the company will integrate its Port Klang operation into its bigger warehouse at Port Klang Free Trade Zone, which is slated to soon come into operation.”
Kenanga Research said the disposal will provide Swift Haulage with a one-off gain of RM14mil.
“The exercise is earnings accretive, as interest savings from the proceeds will boost its FY23 earnings by 3%. The proceeds will also reduce Swift Haulage’s net gearing from 0.83-times to 0.78-times.
Meanwhile, in a filing with Bursa Malaysia, Swift Haulage said that it posted a net profit of RM13.2mil for the second quarter ended June 30, 2022.
Revenue came in at RM160.2mil, up 11% from a year before.
