In a briefing session with analysts including from Kenanga, SWIFT said it is actively talking to potential tenants to fill up its new warehouses in both Port Klang Free Zone and Johor Port. It will expand its warehouse space by another 1.8m sq ff in FY24. Meanwhile, the outlook for Its land transportation unit is positive, underpinned by stable activities at Pengerang and continued container volume growth at Port Klang.
One of the concerns from its 1QFY23 results briefing was the high overheads that had weighed down on its performance, i.e. a 10% increase in its staff strength to 3,621 from 3,300 prior to the expansion (1QFY23 staff cost at 10% of revenue, up from 8% of revenue in 1QFY22). The additional staff cost it said will eventually be passed through to the customers as and when the warehouses are gradually filled up. As such, the company is guided for better margins ahead as it projects the occupancy rate of its warehouses to return to above 80% by 2HFY23.
The hauler once again echoed WPRTS’s guidance for a container volume growth of 0% to +5% for FY23, and single-digit growth for FY24. In the event of a global recession, it holds the view that it will be brief and shallow. As the company depends more on gateway cargoes (compared with transshipment cargoes of WPRTS), it has stronger earnings visibility. Research House Kenanga said it is keeping volume growth assumptions of 7% each for both FY23 and FY24, for its container haulage segment.
The overall occupancy rate of its warehouses has fallen to 75% (from an average of 85% a year ago) due to: (i) the high base following the inclusion of the newly completed PKFZ warehouse into the calculation, and (ii) a slight retracement in the occupancy of its new warehouse in Johor Port as the demand for space from a major customer specialising in sanitiser related products has eased.
It is in the midst of moving its tenants currently housed in third-party warehouses to the newly completed PKFZ warehouse which will immediately boost the PKFZ warehouse’s occupancy rate to 30%. Meanwhile, it is also actively talking to potential tenants to take up the unfilled space in both the PKFZ and Johor warehouses. It expects the overall occupancy rate of its warehouses to return to 80% to 90% by 2HFY23. We are keeping our assumptions of warehousing space of 1.4m sq ft in FY23 and 1.8m sq ft in FY24.
SWIFT reiterated that its land transportation business will continue to be driven by the increase in transportation services at Pengerang for Petronas with a stable production level expected for 2023/2024. In addition, there is rising demand from key customers (i.e. IKEA and Lotus’s) on the recovery in the local retail sector. Analysts are keeping growth assumptions of 4% each for both FY23 and FY24, for its land transportation segment.
The company has completed the expansion of its warehouses in Tebrau, Seberang Prai, and Port Klang Free Zone warehouse, as well as commenced warehouse management and transportation services in Pengerang for Petronas.
