KUALA LUMPUR: Swift Haulage Bhd's earnings forecast has been reduced by MIDF Research, which is concerned about the company's outlook due to rising expansion costs that have reduced margins.
Swift Haulage's earnings forecasts for fiscal years 2023 (FY2023), FY2024, and FY2025 have been reduced by 34 per cent, 19 per cent, and 18 per cent, respectively.
Container traffic dropped further in the third quarter of 2023 (Q3 2023), with Malaysia's exports and imports experiencing a steeper decline of 15.2 per cent and 16.3 per cent year-on-year (YoY) compared to Q2 2023.
"Management noted a slight uptick in container volume for October 23 but remains uncertain about its stability continuing through the first half of FY24.
"The notable decrease in freight forwarding revenue, compared to container haulage (despite its correlation), was partially attributed to lower freight rates and a six per cent YoY decline in Johor port throughput, which is a focal point of its freight forwarding business," MIDF Research said.
Meanwhile the research firm said that the volume of land transportation trips remains robust due to recent fleet expansion.
Swift Haulage 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 per cent to 80 per cent.
The average warehouse utilisation rate declined to 71 per cent compared to 72 per cent in Q2 2023, with the Tebrau warehouse at 45 per cent occupancy.
The company aims to enhance its capacity to 378,000 sq ft by Q1 2024 with the acquisition of a new warehouse in Perai and the Westport Warehouse.
As for the container depot segment, utilisation remains high at 87 per cent in Q3 2023 due to containers being off-hired by shipping lines.
MIDF Research downgraded the stock to "neutral" from "buy" previously, with a lower target price of 52 sen from 65 sen.