WiseTech founder dumps $45.8m of shares, Is the charm around WiseTech Share Price fading away?

  • Jun 30, 2020 AEST
  • Team Kalkine
WiseTech founder dumps $45.8m of shares, Is the charm around WiseTech Share Price fading away?

Summary

  • Richard White, Founder and CEO of WiseTech Global Ltd. (ASX: WTC) sold 2,445,653 shares at $18.40 per share, citing the reason of meeting personal commitments.
  • WiseTech, serving almost 15,000 logistics companies globally including top 50 global third-party logistics, has been impacted by the Coronavirus pandemic, putting a dent on its FY20 guidance.
  • While WiseTech has been under the scanner of shortsellers raising objections on company’s overstated profit and its acquisition strategy, the prominent WAAX player may be monitored in near term amidst its technology development initiatives and broader global tech transition.

Richard White, Founder and CEO of WiseTech Global Ltd. (ASX: WTC), gained almost $45 million on 29 June 2020 by selling 2,445,653 shares at $18.40 per share through his  91.83% owned RealWise Holdings Pty Ltd.

Following the announcement, the stock dipped by 2.22% to close at $19.350.

The sale represents approximately 0.76% of the total issued shares of logistics solutions firm, WiseTech Global. While the stock market is buzzing with the news of WiseTech’s CEO dumping of $45 million worth shares, it would be worth noting that the CEO still holds voting control of over 151 million shares, representing 46.9% of total shares.

The company announced that Mr White intends to remain committed towards WiseTech Global on long-term basis. The CEO has cited to meet personal commitments through selling of his stock.

Earlier, Mr. White sold 206,439 shares for an average price of $22.02 per share between 22 June and 26 June.

This repetitive selling of shares by the Founder and CEO is raising eyebrows, as the selling of shares by the promoter acts as a signal for investors to gauge the health of the company. Investors’ concerns are getting reflected on the stock performance, dipping by more than 10% in last five days.

About WiseTech

WiseTech Global Ltd, member of Australia’s WAAAX cohort of tech shares, provides software solutions to the over 15,000 logistics companies across 150+ countries in the world. Its clientele includes top 50 global third-party logistics providers. The flagship platform, CargoWise, processes over 50 billion data transactions yearly. The company was founded in 1994 and was listed on ASX in 2016.

Casting an Eye on Acquisition Earnout Arrangements

In May, the company renegotiated earnout arrangements for its strategic acquisitions leading to reduction in contingent liabilities from $215.5 million to $68.5m and removal of $151.5 million of future contingent cash liabilities.  The company renegotiated with 17 of its acquired businesses to reduce or close-out future earnouts, resulting in ~70 million fair value gain.

The company also committed equity issuance of $81.4 million, of which $45.7 million were to be escrowed for 12 months.

Guidance and Financial Update

In April, the company reiterated its February earnings forecast of Revenue growth of $420 million - $450 million for FY 2020, representing year-over-year growth of 21% to 29%. The company forecasted its EBITDA range of $114 million to $132 million, i.e. is Y-o-Y growth of 5% to 22%.

The company highlighted a strong cash position to support its business operations and drew focus on its $190 million debt facility that remained undrawn.  

The announcement came at a time when major economies had started feeling the implication of the coronavirus pandemic with onset of lockdowns. Since the health crisis, the world economy has almost come to a halt with logistics sector meeting only essential needs. However, markets are now reopening worldwide, uplifting the business prospects of the company.

The company paid an interim dividend of 1.70 cents a share in April 2020.

In February, the company reported its H1 FY 2020 results for the period ending 31 December 2019.

  • The company recorded revenue of $205.9 million, a 31% jump against the previous corresponding period of $156.7 million.
    • Of $205.9 million revenue, $126.5 million accounted to revenues earned from existing and new customers of WiseTech‘s CargoWise platform, while $79.3 million of revenues were contributed by acquisitions made since 2012 that have not been integrated in CargoWise.
    • 90% of revenue was recurring in nature with the CargoWise platform experiencing an annual attrition rate of less than 1%.
  • There was a 29% increase against the previous corresponding period in its $62.5 million EBITDA.
  • Net profit of the company that is attributable to equity holders was recorded at $59.9 million, a whooping increase by 160% against the previous corresponding period.

While WiseTech has been under the scanner of short sellers raising objections on company’s overstated profit and its acquisition strategy, the prominent WAAX player may be monitored in near term amidst its technology development initiatives and broader global tech transition.

Disclaimer: All the currencies mentioned are in AUD unless specified

 


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