Wisetech shares fell heavily yesterday despite reporting strong earnings and profit growth for the December half after logistics solutions provider’s full-year forecast failed to meet the market’s high expectations.
The shares were down more than 14% at one stage (hitting a day’s low of $19.80) before staging something of a recovery to end the day off more than 10% at $21.03.
Wisetech reported a 68% lift in total revenue to $156.7 million compared to the first half of 2017-18 and a 48% lift in net profit to $23.1 million.
It also lifted its interim dividend by 43% to 1.5 cents per share (yes, it is a tech stock making profits and paying shareholders a dividend).
CEO, Richard White, said in yesterday’s statement “We continued to deliver high quality growth in 1H19 with revenues up 68% to $156.7m and EBITDA up 52% to $48.5m, a reflection of our strategy to accelerate WiseTech’s global growth and industry penetration, driven by geographic expansion, relentless innovation and deepening product capability, all of which saw usage by the world’s largest logistics providers increase.
“The strength of our CargoWise One global platform is reflected in its 100% recurring revenue and annual customer attrition rate of <1% and our EBITDA margin is 49% (excluding acquisitions)— all delivered while enlarging our reach across key trade regions and significantly expanding our pipeline of innovation. CargoWise One continues to be a unique powerhouse technology changing global logistics for the better.”
But that wasn’t enough to get the approval of investors, many of whom believed analyst blue sky estimates for revenue and earnings growth.
The company forecast revenues for the year will be up to 51% higher at $335 million and earnings before interest tax, depreciation, and amortisation (EBITDA) would be between $102 million and $107 million for the year, up around 37%.
But according to Bloomberg, market consensus (from analysts) was higher – revenue of $338 million and EBITDA of $112.7 million, so down went the shares.
Investors might care to reflect on the treatment of WiseTech’s shares yesterday by looking at the way investors sold off shares in heavy equipment group, Emeco Holdings on Tuesday by 24% and then piled back into the stock yesterday boosting it by 15%.
The reason for the sell-off was the failure of the company (which reported an interim profit) to meet very high broker forecasts for revenue and profit, and the revelation of a $20 million deposit on a fleet of new trucks and bulldozers to be leased to mining companies in future years. Those supposed negatives vanished yesterday and Emeco shares rose all day.
WiseTech Global shares should be watched today for any run-up. Did that rebound start late yesterday?
