Tailwinds For WAAAX Stocks - WTC, ALU, APT, APX, XRO

  • Jun 11, 2019 AEST
  • Team Kalkine
Tailwinds For WAAAX Stocks - WTC, ALU, APT, APX, XRO

WAAAX is a popularly used acronym for some Australian technology sector companies, which includes Wisetech Global Limited (ASX: WTC), Altium Limited (ASX: ALU), Afterpay Touch Group Limited (ASX: APT), Appen Limited (ASX: APX) and Xero Limited (ASX: XRO).

These Australian tech stocks have delivered stellar performances in the period ranging up to one year; meanwhile, S&P/ASX 200 Information Technology (Sector) index has returned +22.69% in the same period, and it should be noted that all of these five stocks constitute to the index.

WiseTech Global Limited (ASX: WTC)

Cloud-based logistics software solutions developer, WiseTech Global Limited operates worldwide from forty offices across Europe, Americas and Australasia. ‘CargoWise One’ is the flagship product of the company, which provides end-to-end logistics solutions to varied clients ranging from single-office businesses to large multinationals.

WiseTech Global’s stock last traded at A$27.52, up 2.22%, on 11 June 2019 with the price to earnings multiple of 166.17x relative to its last earnings of 0.162 AUD. The market seems to be bullish on the stock and makes it one of the most sought-after growth stocks in Australia. The company has been posting stellar growing numbers from the business with acquisition driven growth strategies. Below are the acquisitions by WTC until February 2019.

Acquired Businesses (Source: WTC H119 HY Report, Feb 2019)

In the last release in February 2019 for the half-year ended 31 December 2018, WTC reported revenue from ordinary activities of $156.7 Million in 1HFY19 up by 68% from $93.4 million in 1H FY18; this resulted in a Net profit after tax of $23 million in 1HFY19 against $15.5 million in 1HFY18. It was reported that the growth was underpinned by over 240 new internally developed product enhancements and features to CargoWise One technology platform as well as the acquisition of strategic assets in new geographies and adjacent technologies.

WTC is approaching towards fiscal year-end close and recently in a presentation, the company shared the guidance for the FY19, wherein the FY19 Revenues are expected to range between $326m - $339m and FY19 EBITDA is expected to be within $100m - $105m.

FY19 Revenue & EBITDA Guidance (Source: WTC Investor Conference)

The shares of Wisetech Global Limited have delivered a return of over 500% since the listing on ASX, as at 11 June 2019. The year-to-date performance of the stock stands at +58.07%, and the performance of the stock has been trending upwards since the start of the year. One month return of the stock is +16.69%, three-month, six-month, and one-year returns of the stock are +29.99%, +47.67% and +71.14%.

Altium Limited (ASX: ALU)

Altium Limited is headquartered in California, USA. It provides mainly three products that includes Altium Designer, Altium Vault and Tasking. Altium Designer is industry known 3D Printed Circuit Board (PCB) Computer Aided Design; Altium Vault is an automated system to manage design & component data; and Tasking is used to ensure that the developed product is reliable, safe, compact and efficient embedded software.

ALU First Half Year 2019 (Source: Half year Investor Presentation, February 2019)

During February 2019, the company released its half-year results for the period ended 31 December 2018. ALU reported revenue from ordinary activities of US$78.48 million, up by 24% in FY191HY against US$63.2 million in FY181HY. EBITDA saw a growth of 49% from US$18.98 million in FY181HY to US$28.36 million in FY191HY.

As per the half-year release, the revenues and EBITDA resulted in a 58% growth in Profit after income tax of $23.44 million in FY191HY against prior corresponding period. Also, the EPS of the company witnessed a 57% growth at 18 cents against 11.48 cents in the prior corresponding period.

It is worth noting that these numbers are underpinned by the Altium Board and Systems business unit, which saw significant growth across all regions during the period. Altium Designer licence new seats number grew by 34%, Microcontrollers and Embedded Systems business grew revenue by 35% worldwide, and Octopart grew by 80%. The company paid a fully unfranked dividend of AUD 0.16 on 27 March 2019 for the six-month ended 31 December 2018.

After the close of today’s (11 June 2019) session on ASX, the stock of the company closed at A$32.25, up 2.96% from the prior close.

ALU stock price closed at $32.250, up 2.969%, on 11 June 2019. To date the stock has performed consistently well despite a gradual dip in performance during the last three-month and one-month periods with -4.63% and -3%, respectively. The performance of the stock in six months and one year remains attractive with returns at +43.08% and +36.95% respectively, and the year-to-date return of the stock is currently at +44.93%.

Afterpay Touch Group Limited (ASX: APT)

Afterpay Touch Group Limited is a technology-driven payment service provider. APT today made a few announcements regarding its trading halt, capital raising and mid-term targets. The stock of the company remains at trading halt from its previous close of A$24.17 at 7 June 2019.

APT announced a fully underwritten institutional placement of fixed c.13.8m new shares to raise minimum of $300 million, and the price is set to be determined via institutional bookbuild. It was reported that the floor price of $21.75/ share represents a 10% discount to closing price of 7 June 2019. Importantly, prior to the release of announcements today, the stock of the company was placed on trading halt until Thursday, 13 June 2019.

It is reported that three shareholders of the company have agreed to sell (secondary sell down) a portion of their interest to Tiger Management and Woodson Capital at a price same as to be determined in the placement.

Mid Term Strategy (Source: Company’s Announcement)

APT has also offered a Share Purchase Plan (SPP), which is not underwritten. It is reported that SPP is aimed to raise $30 million, and the shareholders on APT books at 7:00 PM on 7 June 2019 are entitled to subscribe up to $15,000 worth of Afterpay shares through the SPP if the registered address of shareholders is in Australia or New Zealand.

The company plans to utilise the fresh capital for its mid-term targets and accelerated global expansion, which includes AFT’s target of over $20 Billion of underlying sales (GMV) per annum by FY2022. It also intends to utilise the funds in accelerating growth with the launch in the US and the UK beside continued investment in ANZ. It is reported that the annualised GMV in USA generated ~A$1.7 Billion, which had been achieved in 13 months, while Australia took three years to achieve the same level underlying sales.

SPP Indicative Timeline (Source: Company’s Announcement)

Over the past one-year period, the stock has delivered attractive return of 195.48% despite a dip of 15.07% recorded in the past one month. As of 11 June 2019, the performance of the stock in the periods of three-months, six-months and year-to-date has returned +26.81%, +90.46% and +101.42%, respectively.

Appen Limited (ASX: APX)

Appen Limited recently released AGM Presentation, reflecting the company’s revenue growth of 119% to $364.3 million in Fiscal 2018. Underlying EBITDA margins improved from 16.9% to 19.6% for the period with Underlying NPAT moving up by 148% to $49.0 million. On the back of Statutory NPAT of $41.7 million, up 192%, the company declared a full-year dividend of 8.0 cps, up 33%, in 2018.

Acquisitions (Source: Company CEO Presentation, May 2019)

As per the presentation, revenues in the language resources delivered record annual revenue of $51.4 million, up 27% on FY2017. Content relevance division of the business clocked revenues at $312.8 million in 2018 against $126.2 million in 2017. Importantly, the Content Relevance part continued strong Q4 performance with margin expanded from 17.6% to 23.9%.

Additional Growth Initiatives (Source: Company CEO Presentation, May 2019)

APX last traded at $26.870, up ~0.6% from the prior close on 11 June 2019. Appen Limited’s stock has delivered attractive returns since its listing on ASX. The performance of the stock in the market remains notable with no negative returns posted in the past one-year as the returns in one-year, six-month, three-month and one-month stood at +137.21%, +98.74%, +8.49% and +7.66%, respectively.

Xero Limited (ASX: XRO)

In May 2019, the company released its full-year results to 31 March 2019 (FY19). As per the results, the operating revenue of the company grew 36% to $552.8 million, and Annualised Monthly Recurring Revenue (AMRR) grew by 32% to $638.2 million along with 31% growth in total subscribers to 1.818 million in FY2019.

Year-End Highlights (Source: FY19 Annual Results)

The company’s net loss after tax for the year increased to $27.1 million primarily due to impairments in the first half of FY2019. As per the release, the company crossed new cloud accounting industry benchmark of one million subscribers in FY19. ANZ saw subscriber growth of 22%, taking its revenue up by 30%. Also, XRO witnessed a strong performance in the UK with subscriber base up by 48% and revenue growth of 50%. Furthermore, 48% subscriber and 39% revenue growth had been seen in North America.

Strategic Initiatives (Source: FY19 Annual Results)

XRO last traded at $60.91, up 2.74%, on 11 June 2019. Xero Limited has recorded positive returns of +34.72%, +52.97%, +20.98% and +9.69% during one-year, six-month, three-month and one-month, respectively.


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