WiseTech CEO Sells $46m of Shares
WiseTech Global Ltd (ASX: WTC) chief executive and founder Richard White has sold AUD46 million worth of shares, or 2,445,653 shares. The total percentage amounts to 0.76 per cent, which leaves the CEO with a controlling portion of approximately 151 million ordinary shares or 46.9 per cent of the issued capital of WTC. Since 2016, Mr White sold out of the company only once to facilitate liquidity when entering the ASX200. The current reasoning for the action is to finance personal engagements.
In the ASX announcement, the CEO assured shareholders that he is still committed to WTC in the long term and that he is confident in the success of the company. In the short-term investors were rattled with the stock price fell by around 4 per cent. WTC has made more than two dozen acquisitions since January 2017, and in February acquired Swiss company SISA Studio Informatica: a customs and freight forwarding operator.
The purchase made for AUD15.5 million had potential earn-out of AUD8.9 million should specific benchmarks be met. Mr White claims the business is a good foothold for WTC geographically, with SISA’s long history of expertise in logistics. Research firm J Capital accused the company of trying to create a perception of fast growth through acquisitions that could give WTC a reason to raise capital for revenue.
This tension between WTC and J Capital Research has continued concurrently with this share selloff; the same hypothesis built upon around the Containerchain acquisition. J Capital proposes that WTC is trying to mitigate damage from their costly acquisition strategy through writing down earn-outs without writing off goodwill. Richard White, in the past, has accused J Capital’s approach to WTC as ‘bomb lobbing’.
All of the speculation and controversy will be put to rest when WTC releases their FY2020 annual results in August. The first half results saw significant revenue growth of 31 per cent coming to 205.9 million compared to 1H19. The firm reported a low level of customer attrition with less than 1 per cent every year for the last 7.5 years. Thirty-six per cent of revenue went to developing products with a total of AUD73 million spent, which continues the 3500 features added and enhanced in the last five years. Fourteen per cent of revenue went to sales and marketing, with 12 per cent going towards employees. Fall in return on equity and a slight drop in operating margins seems to be the only fundamental data point to deliberate upon.
Finally, WTC saw a 29 per cent increase in earnings before interest, tax, depreciation and amortisation (EBITDA) which comes out to AUD62.5 million. Despite the criticism, WTC looks to be very fundamentally sound and well-positioned with their scalable commercial model and a globally integrated platform. As the company utilises innovative technology with thousands of nodes giving feedback on logistic data points, WiseTech is at the forefront of logistical expertise.
By Caroline Wong
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