WiseTech Global Limited’s (ASX: WTC) stock climbed up 1.429% on October 17, 2018 after an announcement on the strategic acquisition with IFS Global Holdings (‘SmartFreight’). As per the release, SmartFreight is the leader in providing parcel and LTL (Less than Truckload) shipping software company. The headquarters of SmartFreight is in Sydney, Australia which is the provider of multi-carrier shipping software solutions to customers across Australia, Asia, Ireland, New Zealand, South Africa, and the United Kingdom. Furthermore, SmartFreight processes approximately 50 million parcels in the domestic market.
The importance of acquiring SmartFreight into the WiseTech group is that it will accelerate in the company’s global expansion of company’s next-generation CargoWise One e-commerce offering in order to fulfill the e-commerce requirements of international and domestic customers. Moreover, the pilot testing is in progress with a major air-freight forwarder which is expected to launch soon.
The acquisition comprises the cost of $20.0 million immediately. Further, an amount worth ~$35 million needs to be paid based on the earn-out potential in regard to business and product integration, transitions of the customer and performance of the revenue made in FY20. Further, SmartFreight is anticipated to be consolidated into WiseTech Global accounts from November 2018.
SmartFreight, under the leadership of Managing Director, Ken Aitken, will continue to work with the partners of the companies and deliver innovative parcel shipping solutions to delivery providers worldwide. The 8000 logistic providers across the world who utilizes the integrated supply chain execution solutions of WiseTech can now be accessed by SmartFreight as well.
With the continued strong organic growth of the company for the year ended 30 June 2018, there is a significant growth in the revenue of the company. The revenue in the FY18 increased by 44% to $221.6 million as compared to prior year. The operating profit of the company also increased by 41% representing $58.4 million. NPAT stood at $40.8 Mn, displaying ~27% growth on Y-o-Y basis. As a result, EPS got increased by 28% in FY18 over the prior year. There is a cash inflow of $74.175 million from the operating activities. The company has acquired a business, purchased property, plant, and equipment and also made payment for the intangible asset which resulted in the net cash outflow of $143.033 million. The net cash which was generated net cash inflow through financing activities worth $88.840 million. On the whole, there was an increase in the net cash and cash equivalent of $19.962 million. At the end of the period, the net cash and cash equivalent to the company came in at $121.824 million. The company currently has total assets worth $537.226 million and total liabilities worth $185.071 million. This indicates that the company has a potential to clear its long-term obligations. The current asset of the company is $160.779 million and total current liabilities worth $79.570 million. This indicates that the company has a potential to clear its short-term obligations. The market price of the share is A$17.75 (AEST 4 pm) with the market capitalization of circa A$ 5.27 billion and PE ratio of 125.9x. As per the chart, the moving average convergence divergence line is moving below the signal line indicating the price to be bearish in nature.
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