Tech Stock That Is Being Hammered: WiseTech Global Limited

WiseTech Global Limited (ASX: WTC), the provider of software solutions to the logistics industry globally was under the radar since a couple of weeks after J Capital Research, a registered investment advisor with the US SEC accused WiseTech for:

• Inflating profits
• Its acquisitions
• Customer attrition and fall in revenue
• Organic growth
• Dissatisfied customers

However, the company responded to the allegations and stated that the claims by J Cap were untrue.

These allegations created a negative impact on the investors, and its effect was seen in its share price which dropped from $33.400 on 16 October 2019 to $26.300 on 21 October 2019, a fall of ~ 21.26%. The stock has not been able to meet the investors’ sentiment positively yet.

On 19 November 2019, WTC’s share opened at $28.700, down $0.17 from its previous close. By the end of the trading session on 19 November 2019, WTC’s closed at $26.650, down 7.69% as compared to its previous closing price. WTC holds a market cap of 9.19 billion with 318.19 million outstanding shares, PE ratio of 163.110x and an annual dividend yield of 0.12%.

However, on the positive side, WTC on 19 November 2019 released its AGM presentation where it highlighted its FY2019 financial highlights, its employees, Its CargoWise One platform, its powerful growth strategy and FY2020 Outlook. Let’s look at them separately.

1. FY2019 Financial Highlights:

• Revenue during FY2019, period ended 30 June 2019, increased by 57% to $348.3 million as compared to FY2018
• Operating profit rose by 37% to $80.2 million.
• Net profit went up by 33% to $54.1 million.
• EPS increased from 13.9 cents in FY2018 to 17.7 cents in FY2019.
• Dividend per share (Final) also increased by 18% to 1.95 cents. Total fully franked dividend for FY2019 was 3.45 cents per share.

2. Employees: WTC believes that its employees are changing the world of logistics one innovation at a time. It has categorised its employees based on:

• Employees by function: Under this category, 47% of the employees are engaged in product designing and development, 12% in sales and marketing, 23% in technical and product support and 18% in general and administration.
• Employees by region: Out of the total employees, 35% belong to Australia and New Zealand, 29% from Europe, 4% from South Africa, 13% from Asia, 11% from North America, 6% from Latin America and 2% from the Middle East.
• Employees by age diversity: 21% of the employees were under 30 age group, 50% were in between 30 to 44 years, and the remaining 29% belonged to 45 years and above age bracket.

3. Board: As the company continues to expand its technology, global workforce and geographic footprint, the company finds it necessary that the Board keeps pace. In order to meet the rising needs from the global expansion, the company since late 2017 have been working on Board evolution. In September 2018, Charles Gibbon, the former Chairman, stepped down from the position of Chairman and remains on the Board as a Non-Executive Director.

4. CargoWise One Platform: WTC believes its CargoWise One Platform will lay a strong foundation for future technology, seamless rollout, scalable capacity, global solution. WTC’s technology is being used by logistics providers around the world by nearly 150 nations. It has more than 12,000 logistic organisations around the world as its customers.
5. Powerful growth strategy: WTC considers below-mentioned levers of growth to drive its future.

• Innovation and expansion of its global platform.
• Greater usage by its existing customers.
• Increase new customer on the platform.
• Stimulate network effects.
• Accelerate inorganic growth through acquisitions.

6. FY2020 Outlook:

• The company expects its revenue to range between $440 million to $460 million, representing growth in between 26% to 32%.
• EBITDA in FY2020 is expected to be in between $145 million to $153 million, representing a growth in the range of 34% to 42% as compared to FY2019.

Concluding his speech, WTC’s Chairman thanked its shareholders and customers for their support and confidence, especially during the recent weeks when the company denied the misleading claims in short-seller reports. The company assured them that the Board, WTC’s leadership, as well as its global teams, remain committed and focused on the delivery of the strategy and building on shareholder value.

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