Logistics player, Swifthaulage noted that its container traffic dropped further in 3QFY23, with Malaysia’s exports and imports experiencing a steeper decline of -15.2%yoy and -16.3%yoy respectively as compared to 2QFY23. Due to the recent report, MIDF has revised its call on the company from Buy to Neutral.
The company experienced a slight uptick in container volume for Oct but remains uncertain about its stability continuing through the 1HFY24. Meanwhile, the notable decrease in freight forwarding revenue, compared to container haulage (despite its correlation), was partially attributed to lower freight rates and a decline in Johor port throughput, which is a focal point of its freight forwarding business.
The volume of land transportation trips remains robust due to recent fleet expansion. As in previous quarters, the decrease in average revenue per trip was primarily because Watt Wah handled shorter-distance trips within Singapore. Management anticipates this segment to receive a further boost in the coming year as activities at the Pengerang Integrated Complex pick up, with the expected occupancy of the warehouse they operate to increase from 50% to 80%.
Average warehouse utilisation rate declined to 71% with itsTebrau warehouse at 45% occupancy, but a new energy drink customer joining in Oct is expected to increase it to 70% by year-end, while the occupancy of the PKFZ warehouse remains at 30%. Swift Haulage aims to enhance its capacity (+378,000 sq ft) by the first quarter of next year with the acquisition of a new warehouse in Perai and the Westport Warehouse, which it is constructing, already has an existing E&E customer prepared to utilise 70% of the space. As for the container depot segment, utilisation remains high at 87% in 3QFY23 due to containers being off-hired by shipping lines.
In view of this, MIDF has grown cautious about the Group due to rising expansion costs that have reduced margins. After adjusting assumptions to align with 9MFY23 operating statistics and lower margins, the house is revising earnings by -34%/-19%/-18% for FY23E/FY24F/FY25F. Consequently, TP is now lower at RM0.52 (from RM0.65).
