Is Wisetech On An Expansion Spree With latest Acquisition Of Systema?

WTC

On 1 February 2019, Wisetech Global Limited (ASX: WTC), a company from information technology space that provides software solutions to the logistics industry globally announced the acquisition of Systema, which is a leading Norwegian customs and logistics solutions provider. Systema provides solutions to customers from Norway, Denmark, and Sweden, on the customs and logistics management area. Based on the acquisition of Systema, Richard White, who is the founder and CEO of WTC is optimistic about WTC’s footprint in three largest markets in the Nordic region which include Norway, Denmark, and Sweden.  

He considers this acquisition, a further step towards the global geographic foothold strategy where the company will be able to expand its lead in customs clearance and border compliance. The current acquisition along with the earlier acquisition of CargoIT will help in increasing WTC’s foothold in Belgium, Germany, France, Ireland, Italy, Netherlands, Spain, Sweden, and Turkey.

The acquisition of Systema comprises of the purchase cost of ~$3 million upfront and the multi-year earn-out potential of ~$2.7 million regarding through the integration of business and product, and also the revenue performance.

Since the inception of WTC, the stock has given a positive performance of 422.88%. In last one year, WTC stock generated 31.31%.

As per the annual report of WTC for the period ended 30 June 2018, there was an increase in the revenue by 44% as compared to the previous corresponding year. The net profit after tax during the period was $40.794 million. As per the balance sheet, the company has a net asset base of $352.155 million which was up by 64.74% as compared to the previous corresponding period. There was also an increase in the total current asset as a result of a significant increase in the cash and cash equivalent, trade receivables. However, the total current liabilities as a result of an increase in the trade payable were up while retained earnings by the end of FY2018 also increased. The total shareholders’ equity is worth about $352 million.

There was a net cash flow of $74.175 million through the operating activities during the period which was up by approximately 35% as a result of increased cash flow through receipts from customers. During the period, the company made payment for the intangible asset, acquired businesses and also purchased property, plant, and equipment. As a result, the net cash outflow via investing activities was $143.033 million.

The company also made repayment of finance lease liabilities, repayment of borrowings, paid interest and dividend. At the same time, WTC generated revenue from the issue of shares. As a result, there was a net cash inflow of $88.840 million from the financing activities.

By the end of FY2018, as on 30 June 2018, WTC reported for net cash and cash equivalent of $121.824 million.

By the end of the trading on 1 February 2019, the closing price of the stock was A$20.67, which was up by 1.622% with the market capitalization of A$6.12 billion and PE ratio of 146.330x.


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