PETALING JAYA: The proposed acquisition of KP Depot Services Sdn Bhd by Swift Haulage Berhad (Swift Haulage) bodes well for the group as it is set to fortify its container depot services amid downside risks. The integrated logistics service provider’s wholly-owned subsidiary, Swift Integrated Logistics Sdn Bhd, had recently entered into a memorandum of understanding (MoU) with Sowatech Sdn Bhd and KP Port Services Sdn Bhd for the acquisition of the entire equity interest in KP Depot Services.

The acquisition, valued at between RM9mil and RM11mil, would be fully satisfied by way of cash payment. The MoU, valid for a period of up to four months, would not have an impact on the group’s earnings per share (EPS), net assets per share and gearing for FY22.

MIDF Research, which is maintaining a “buy” call on the stock, saying the proposed acquisition is expected to strengthen the group’s network of container depot services. “To date, Swift Haulage operates four container depots within the vicinity of Port Klang which have the total capacity of 28,500 twenty-foot equivalent units. “We like the group due to its fairly diversified business model, its sizeable fleet of commercial vehicles which is three times larger than its closest competitor and its above average profit margins.

“However, the key downside risks to our call include the deterioration of its major customers’ business performance which could bring down the demand for the group’s services, increase in diesel prices which could weigh down on the group’s profitability, and shortage of truck drivers,” it added. The research house said its earnings estimates remain unchanged, hence was maintaining its target price of RM1.28.

It noted that the target price was derived by pegging Swift Haulage’s financial year 2022 (FY22) EPS of 6.98 sen to target price-earnings ratio (PER) of 18.3 times, which is based on the three-year historical mean of its peers.

Being one of the largest listings in 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. Swift Haulage Berhad made its debut on the Main Market of Bursa Malaysia in December last year. There are no comparative figures for the immediate preceding corresponding quarter and period, as this was the first interim financial report for the third quarter ended Sept 30, 2021 announced by the group in compliance with the listing requirements of Bursa Malaysia.

In its notes on its latest financial results, Swift Haulage said revenue during the quarter was mainly contributed by container haulage of RM203.2mil and land transportation of RM128mil, which represented 77% of the group’s total revenue.