PETALING JAYA: Swift Haulage Bhd
’s recovery is on the cards, underpinned by improvements in container throughput from easing congestion and better margins from higher overall warehouse utilisation rates.
The integrated logistics service provider reported a core profit after taxation and minority interests (patami) of RM8.3mil for the second quarter of financial year 2024 (2Q24), resulting in a total core patami of RM15.9mil for the first half of FY24. This largely fell short of analysts’ and consensus’ expectations.
Apex Securities said the group experienced a decrease in job volume across the container haulage, land transportation and freight forwarding segments compared with the previous quarter.
“The decline is touted to be impacted by fewer working days due to the festive season in April and the inefficiencies in customer volumes caused by port congestion challenges.
“Additionally, margin for the land transportation business (pre-tax profit: RM1.8mil) dropped significantly, with a four-percentage point decline in pre-tax profit margin year-on-year and quarter-on-quarter.
This was due to lower pricing aimed at maintaining competitiveness, as observed by the reduced revenue per trip, while the cost environment remained challenging,” the research firm said in a report yesterday.Moreover, Swift Haulage also posted disappointing results for the warehousing and container depot segment, with both revenue and profit remaining flat for the quarter, despite the new 270,000 sq ft warehouse in Port Klang becoming operational.Apex Securities said the Red Sea crisis has resulted in escalating port congestion in Asia ports over the past few months, which impacted throughput volumes.
However, congestion has slightly eased recently, as liners have adapted to rerouting and scheduling changes.
“Despite the 2Q24 earnings missed expectations, we remain optimistic that recovery is on the cards in the second half of FY24.
“This is supported by improvements in container throughput as congestion eases and the contribution from the new Penang warehouse,” the research house said.
Apex Securities maintained a “buy” call for Swift Haulage with a lower target price of 62 sen. The research house trimmed its earnings forecast by 11% for FY24 and 8% for FY25, mainly because of the challenging operational environment affecting margins in the land transportation segment.
