The acquisition is part of the group’s growth strategies to expand into East Malaysia.
KUCHING (May 5): Analysts are upbeat as Swift Haulage Bhd’s (Swift Haulage) wholly-owned subsidiary, Swift Integrated Logistics Sdn Bhd (SILS), had entered into a share sale agreement to purchase the entire equity interest in Standard Marine Agencies (Sarawak) Sdn Bhd (SMA).
The purchase consideration of RM1.4 million is to be fully funded by internally generated funds. The deal was completed on May 2, 2023 upon the completion of the share sale agreement.
SMA is a freight forwarding and logistics company with its headquarters in Kota Kinabalu, Sabah and having presence throughout Sarawak as well.
The group on its website said it has branches in all major ports throughout East Malaysia.
Analysis showed that the acquisition is part of the group’s growth strategies to expand into the Borneo island.
MIDF Amanah Investment Bank Bhd (MIDF Research) believed this presented an opportunity for Swift Haulage to upsell its services within the vicinity given that most of its ocean freight forwarding jobs are for the East-West Malaysia route.
“By growing through acquisitions, the group will be able to retain the target company’s truck drivers amidst the current industry-wide shortage,” it said.
“So far, Swift Haulafe is only providing cold-chain logistics services in Sabah via its 50 per cent-owned Hypercold Logistics Sdn Bhd and 15 per cent-owned Platinium Coldchain Sdn Bhd.”
Currently, Swift Haulage has a cash balance of RM51.4 million as at end-FY22, which MIDF Research said should be sufficient to internally fund the acquisition.
“We make no changes to our earnings estimates pending further information from the management,” it said. “We can anticipate an improvement in margins for Swift’s transportation businesses following the completion of its cost pass-through exercise in 4QFY22.
“The group’s earnings growth will primarily stem from its warehousing segment, driven by the full-year revenue contribution from the 42 per cent increase in available capacity that was gradually added to its portfolio of ‘own and operate’ warehouses last year.”