ASX:WTC
WiseTech Global Ltd
Investment Summary
The fund managers believe that WiseTech Global Ltd has demonstrated strong operational performance and significant market leadership, particularly with its flagship product, CargoWise. In their opinion, recent customer acquisitions, including a global rollout with Kuehne + Nagel, mark a pivotal moment for the company, signaling readiness for a scalable customs clearance module. The fund managers noted an impressive financial result for 1H24, with upgrades to projected EBITDA margins, indicating continued profitability. Furthermore, they see the potential for long-term growth through expansion into new markets and cross-selling opportunities. However, concerns were raised regarding current valuation levels, as WiseTech's trading multiples, such as a 91x P/E ratio, led some to adjust their investment positions. Overall, the fund managers maintain a positive outlook on WiseTech but anticipate future re-entry at a more favorable valuation.
Commentary From The Managers
Endeavor Asset Management
31 Mar 2024
$94.97
- Endeavor Asset Management exited their position in Wisetech at $95/sh in March.
- This decision followed a 60% return in four months after buying at $60/sh in November.
- The business demonstrated consistent organic and inorganic revenue growth.
- Wisetech is a market leader positioned to become the industry standard for freight forwarders.
- Significant adoption by large players highlighted the company's strong market position.
- Yet, a 91x P/E ratio was deemed too expensive for Endeavor's investment criteria.
- Endeavor is confident in future opportunities to reinvest in Wisetech at a more compelling valuation.
Endeavor Asset Management
28 Feb 2024
$94.43
- Endeavor Asset Management continues to hold a positive outlook on WiseTech Global Ltd.
- The logistics software business saw a significant increase of +29% in February after strong 1H24 financial results.
- More than half of the top 25 largest freight forwarding businesses globally utilize WiseTech's CargoWise.
- A major highlight of the 1H24 results was the better-than-expected EBITDA margins, leading to an upgrade for FY24 EBITDA margins to 44-46%.
- This upgrade implies that 2H24 margins are expected to be greater than 46%, with longer-term margins potentially exceeding 50%.
- CargoWise is increasing its penetration in major global freight forwarding businesses while expanding into new US markets through acquisitions.
- This strategy opens up opportunities for cross-selling within the logistics sector.
- Despite a positive long-term outlook, the firm has trimmed its overweight position as WiseTech trades at approximately 51x NTM EV/EBITDA.
- This valuation is higher compared to the 45x 5-year average and near the recent peak of ~53x in August 2023.
Cooper Investors
31 Mar 2023
$65.14
- WiseTech (WTC), a leader in logistics software solutions, reported impressive first-half results.
- A notable achievement is the acquisition of a significant new customer, enhancing growth prospects.
- WiseTech’s CargoWise product is recognized as a top-tier forwarding solution among major freight forwarders like DHL, DSV, and UPS.
- Management has made substantial investments in developing a customs clearance module through acquisitions and R&D.
- This module presents an opportunity for CargoWise users to effectively manage complex customs processes.
- The recent global rollout of the customs module with Kuehne + Nagel, the world's largest freight forwarder, marks a pivotal moment.
- CEO Richard White describes this as a “watershed” moment, underscoring the module’s readiness for global implementation.
- This development boosts confidence in the customs module’s future potential as a value driver.
- It aligns with WiseTech’s goal of evolving into the “operating system for global logistics”.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.