WisTech Global Looks To Capitalise On Global Supply Chain Congestion...

Industry News

& Articles

WiseTech Global Looks To Capitalise On Global Supply Chain Congestion

Facebooktwitterlinkedin

Sea port access and air freight restrictions have created global supply chain congestion and disruption, resulting in higher freight rates, caused by COVID.

  • International logistics service providers are fast tracking replacement of in-house legacy systems and transitioning to CargoWise for productivity gains, driving WiseTech revenue growth
  • Continued investment in R & D, $167 million in FY21, equating to 33 percent of Total Revenue.
  • FY22 revenue of $600 to $635 million and EBITDA of $260 million to $285 million reaffirmed, representing increases of 18 to 25 percent and 26 to 38 percent, respectively
  • Favourable long-term industry dynamics and the market power of CargoWise, ensures consistent long-term earnings growth for the Group.

WiseTech Global (‘WiseTech’ or the ‘Group’) is the owner of ‘CargoWise‘, an integrated, global software platform for international logistics service providers. Customers include over 18,000 logistics companies from 165 countries. The Group’s software services 40 of the top 50 global third-party logistics providers and 24 of the 25 largest global freight forwarders worldwide.

AGM Commentary

The chairman provided market context in relation to WiseTech’s FY21 performance and the Group’s response to COVID-related factors that are shaping its strategic direction.

Strong consumer demand for goods, buoyed by government fiscal stimulus around the world, continues to support global trade. However, diminished shipping container availability and port access issues have limited sea freight capacity. Reduced air freight belly-hold capacity resulting from passenger travel restrictions, has created supply chain congestion and disruption, resulting in higher freight rates.

These market conditions have accelerated the move by international logistics service providers to fast track the replacement of their in-house legacy systems with advanced, integrated software platforms, such as CargoWise. WiseTech are a major beneficiary of this trend. The superior functionality of their integrated global software platform delivers efficiencies, productivity enhancement, transparency, risk mitigation and facilities planning to logistics providers.

Increased consolidation of logistics providers within the sector is also driving WiseTech’s revenue growth. Consolidation is being driven by larger global logistics providers. WiseTech benefits from this consolidation because existing customers are the acquirer, or WiseTech’s platform is already in place in the acquired business, and adopted by the acquirer. These structural trends are translating into immediate revenue growth for WiseTech.

Market penetration of WiseTech’s fully digital logistics solutions is still in the early stages and so the ongoing revenue growth opportunities are vast. The Group secured six new global rollouts in FY21 and signed global leader, FEDEX, post 30 June 2021. These rollouts are in addition to the 30 existing rollouts that WiseTech currently has in place.

The chairman explained that the Group has intentionally slowed its near-term acquisition activity in order to focus on expanding the CargoWise ecosystem and to extract synergies from past acquisitions, to maximise operating leverage and drive scalability. The Group will also continue to innovate and enhance is Intellectual Property by undertaking extensive R & D. In FY21, WiseTech invested $167 million in R & D, equating to 33 percent of Total Revenue.

Ninety-seven percent of the CargoWise $331 million revenue base is recurrent and delivers an extraordinary high gross profit margin of 85 percent of sales revenue. The notion of ‘make it once and sell it many times’ continues to be an appealing aspect of the WiseTech business model.

The attractiveness of the WiseTech business model is also reflected in its strong financial position at 30 June 2021 of $315 million in cash and no outstanding debt. The Group’s operating cash flow increased by 57 percent on FY20, highlighting the strength of WiseTech’s underlying operating model. This strong balance sheet is strengthened by the flexibility of a new, unsecured $225 million facility, provided by a syndicate of 6 banks.

Outlook

The favourable long-term industry dynamics and the market power of the integrated, global software platform, CargoWise, ensures consistent long-term earnings growth for the Group.

This was reiterated by the Founder and Chief Executive Officer, Richard White, in his shareholder address, when he stated that there has never been a greater need for globally integrated logistics technology, in the sector that WiseTech operates.

The CEO reaffirmed FY22 revenue estimates of $600 to $635 million, an increase of 18 to 25 percent, compared to the previous year. This equates to EBITDA growth of 26 to 38 percent, representing $260 million to $285 million, for the FY22 financial year.

Louis Mosmann

Louis Mosmann is a Private Wealth Client and Research Assistant at KOSEC- Kodari Securities. Louis covers macroeconomic events, global markets and ASX300 company announcements, allowing clients to make more informed investment decisions. Email Louis at l.mosmann@kosec.com.au.

Comment on this company

Latest Stories

Fisher & Paykel Healthcare Revenue Down

Fisher & Paykel Healthcare Revenue Down……

Iron Ore Prices Show Signs Of Rebound

Iron ore prices see a potential rebound in price……

Harvey Norman, Lockdown Restrictions Reduce Sales

Lockdown restrictions reduce sales by 8.8 per cent… …

More for you

NIB Holdings Limited Adds Kiwi Insurance And Telehealth Investment

NIB Holdings Limited (ASX:NHF) announces $4 million investment……

Northern Star Resources Limited Announces Kalgoorlie Power Plant Acquisition

Northern Star Resources Limited Announces Kalgoorlie Power Plant Acquisition……

Link Administration Holdings Limited Manages Strong Acquisition Interests Ahead Of 2H22 Results

Link Administration Holdings Limited Manages Strong Acquisition Interests Ahead Of 2H22 Results……

Accent Group Limited Plots Ambitious Steps Towards Retail Expansion

Accent Group Limited Plots Ambitious Steps Towards Retail Expansion……

Sonic Healthcare Significantly High COVID-19 Test Volume

Significantly high COVID-19 test volume……

Aristocrat Leisure Rakes In Strong Earnings With FY21 Report

Aristocrat Leisure Limited has today published its FY21, highlighting……

KOSEC Terms & Conditions

Kodari Securities Pty Ltd (CAR 399556) trading as KOSEC is regulated by the Australian Securities and Investment Commission (ASIC). KOSEC is a financial services company and any information provided by its platforms, portals, reports and documents is protected by copyright. Any unauthorised production of this information is prohibited.
KOSEC reserves the right to change or remove any information provided on our website, reports or any documents including these terms and conditions at any time without notice. The change or modification to the terms and conditions will be effective immediately upon posting an updated version on our website, necessary platforms and documents. It is recommended that you review the information provided on our website, including these terms and conditions frequently for any changes.

Disclaimer
KOSEC provides general advice only. The information provided is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. KOSEC recommends that you obtain your own independent professional advice before making any decision in relation to your particular requirements or circumstances. Please make sure you read our Financial Services Guide (FSG).

KOSEC does not guarantee any returns. Past performance of any product discussed is not indicative of future performance. (We urge that caution should be exercised in assessing past performance. All financial products are subject to market forces and unpredictable events that may adversely affect their future performance). Investing in the stock market can incur huge losses. Please also be aware that fees will incur on every transaction regardless of the performance of your investments or returns generated. Employees and or associates of KOSEC may hold one or more of the stocks, securities or investments reviewed by the company.

Your use of information from our website, reports, documents and from talking to our representatives/associates is at your risk. Under no circumstance should the investment be based solely on KOSEC information and general advice. You should seek professional financial planning advice.
KOSEC aims to maintain the accuracy of the data and information provided on this website, by using information prepared from a wide variety of sources, which KOSEC to the best of its knowledge and belief, considers accurate and does not make any representations or warranties of any kind, expressed or implied, about the completeness, accuracy, reliability, suitability or availability of the information provided.

We may at times refer to third parties, which the details of these third parties have been provided solely for you to obtain further information about other relevant products and entities in the market. KOSEC has no control over the information third parties have, or the products or services offered, and therefore make no representations regarding the accuracy or suitability of such information, products or services. You are advised to make your own enquiries in relation to third parties. Our inclusion of any third party content is not an endorsement of that content or the third party.

Fees
As a client you will be charged a yearly service fee and a set brokerage fee per transaction. Your service fee will automatically renew at the end of your agreed 12 month period at the same rate advertised at the time. Your credit card or bank account will be charged for a further year following which will again auto renew until you cancel your yearly service fee. You can cancel the auto renewal at any time in advance of the renewal date by contacting us. KOSEC is aware of the need to ensure the security of your credit card details and our payment systems are compliant with the Payment Card Industry (PCI) Data Security Standard.

Privacy
You consent to receiving email correspondence from KOSEC, as well as companies KOSEC has an association with. These emails will be sent by KOSEC and third party companies. You can opt out of receiving any category of emails at any time by contacting us. We may from time to time inform you of special offers, or even ask your opinion of the services we provide, but your involvement is optional. Should you request us to do so, we will archive your details.

Indemnity and Liability
You indemnify KOSEC from all claims or threatened claims, suits, demands, damages, costs as well as including legal costs incurred in dealing with any threatened claim, expenses made by any person or corporation against KOSEC and any other amounts which is caused by KOSEC providing information, execution and General Advice.

You hold KOSEC harmless and release it from any liability in respect of any loss, harm or damage arising from a decision made by you on the basis of information obtained through the use of our portal, reports, documents or any General Advice given and any transaction taken place.

You hold KOSEC harmless and release it from any liability in respect of any loss, harm or damage arising from delays in executing orders for the client and acknowledges KOSEC makes no guarantees about the time taken to execute an order on behalf of the client. You acknowledge that KOSEC relies on third parties in providing technology and release KOSEC from any harm, loss or damage you may suffer as a result of the failure of such information technology.

Cookies and Links
KOSEC website, and its portal uses cookies, which lets us identify your browser while you are using the site or our portal. Cookies do not identify you personally. They simply allow us to track your usage patterns. If you prefer not to receive cookies, you can configure your browser to reject them or to notify you when they are being used. The functionality of the KOSEC website may be impacted if you restrict the use of cookies.

Fill up the form below and we will get back to you as soon as possible.

CLAIM YOUR FREE E-BOOK &
7 DAY ACCESS TO LOTUS BLUE

STOCK MARKET SUCCESS

KOSEC’s CEO, Michael Kodari’s new book, “Stock Market Success” valued at $39.95, available at Dymocks book stores with all the proceeds going to Dymocks Children’s Charities.

CLAIM YOUR FREE E-BOOK WHEN YOU LOGIN TO LOTUS BLUE INVESTMENT PORTAL

Latest TV Commercial