PETALING JAYA: Integrated logistics service provider Swift Haulage Bhd’s future earnings will be anchored by its expansion plan which is expected to result in it cross-selling its services as well.

       The company which owns 1,460 and 86 prime movers in Malaysia and Thailand respectively, has a prime mover utilisation rate of between 81% and 89%, based on financing year ending Dec 31, 2020 (FY20) figures, according to Rakuten Trade Sdn Bhd.

       “The acquisition of new prime movers will give Swift Haulage the capacity to grow its container haulage and land transportation business operations,” the research unit said in an “investment idea” note to clients.

       According to it, Swift Haulage intends to purchase 30 new prime movers which will cost them some RM12mil.

       “Upon the completion of a new warehouse in the Port Klang Free Zone by the third quarter of FY22, the group will have a planned floor space of approximately 178,000 sq ft as compared to 54,300 sq ft currently.

       “This will enhance the group’s ability to better serve existing and potential customers as the Westport Warehouse is currently fully utilised,” it added.

       Currently trading at an “alluring” valuation of only 10 times price earnings (PE), Rakuten has a “buy” call on the Swfit Haulage stock, with a target price of RM1.09 based on 16 times PE multiple to its FY22 earnings per share (EPS) of 6.8 sen.

       “We believe a 16 times PE valuation is justified given its solid earnings visibility and the ability to enhance its market share within the domestic transportation industry,” it said.

       At last look, Swift Haulage was at 82 sen per share, giving it a market value of RM730mil.

       Being one of the largest listings of 2021, Swift Haulage’s initial public offering raised RM161.9mil and comprised a public issue of 157.14 million new shares and an offer for sale of 177 million existing shares, including the over-allotment option.

       The company made its debut on the Main Market of Bursa Malaysia in December last year.

       Its first public earnings announcement last December saw it announcing a net profit of RM12.12mil for the the third quarter of FY21 on a revenue of RM139.25mil.

       This translated into an EPS of 9.92 sen.

       For the first nine months of FY21 period, the company said its net profit stood at RM35.4mil on a revenue of RM430.86mil with EPS coming in at 35.85 sen.

       Its revenue for the period was mainly contributed by its container haulage segment as well as its land transportation segment which collectively made up 77% of total revenue.

       The balance was contributed by its warehousing and container depot segment and its freight forwarding segment.