Growth Focus: WiseTech Global Ltd (WTC)

by Patrick Taylor

Date of Data Capture: 25/1/2019
Classification: Enterprise Software
Current Price: $20.11
Market Capitalisation: $5.86B
Forecast EBITDA Growth: 42.13%
Yield Estimate: 0.21%
Consensus Price Target: $18.45
# Covering Analysts: 7
Premium at Current Price: 8.25%
Price Target Trend: Increasing
Signal Timeframe: Quarterly-Weekly-Daily
Trend Bias: Up-Flat/ Long-Short

Short-term: Positive-Neutral
Medium-term: Positive

Recommendation: Buy
Focus: Capital Growth
Set up Notes:
·    Logistics software provider WTC has a good track record of strong fundamental performance pushing impressive price growth – a trend that is set to continue with strong forecasting and fresh positive signalling on display right now.
·    Surging sales and strong margins saw earnings up over 40% last year and that is expected to be repeated again in 2019 - with consistent aggressive growth forecast out to 2021, supported by strong sales and cash flow.
·    Pricing can be volatile but with linear resistance breaking earlier this month and the $20 ceiling breaking this week the set up looks ready to go with resistance targets stretching higher above.
·    Support: $19.00, $18.00, $16.00 & $15.00.
·    Resistance: $22.00, $23.00 & $25.00.


Our primary focus here is capital gain, we will select our stocks from the ASX Top 500 All Ordinaries Index.

Supply chain heavyweight WiseTech Global Ltd has a history of strong performance and we believe they should be able to link together further growth as fresh strength and excellent forecasts predict strong future demand.

Established in 1994, Wisetech has grown into a major international supply solutions company, providing logistics support to over 8000 corporate clients in 130 countries around the world, including many of the largest global operators.  Managing the cutting edge and innovative software as a service platform; CargoWise One, the company provides operational assistance to major supply chains in the execution of over 44 billion transactions every year. While the company has been delivering strong organic growth, this progress is well supported by an ongoing and aggressive acquisition strategy that promises to capture further growth ahead, with recent purchases increasing exposure to large markets in Europe, Asia and the Americas. 

WiseTech has displayed excellent fundamental performance since floating onto the ASX mid-2016, with earnings growth up over 70% in the first full year and further gains of over 44% last year. Analyst forecasts predict 2019 is set to be another good one for investors with earnings set to increase by over 42% this year with only slightly softer growth seen stretching out to 2021. Sales expansion will continue to be the focus as WiseTech pursues new and relatively untouched markets, driving the seemingly ravenous appetite for synergistic overseas acquisitions.

We need to highlight the excellent client retention rate, averaging close to 99% recurring revenue, which should be a strong positive signal and give confidence to investors. Expectations for longer-term strong growth run contrary to subdued consensus target pricing where current values are above expectations - but these targets have been chasing the price higher for much of the stocks trading history and those instances where it has traded at or below fair value have proven to be good buying opportunities.

Earlier this month pricing broke through linear resistance that had formed over the last six months of price consolidation (from highs around $25) and currently shows a very interesting set up where price is currently working against $20 structural resistance. Some whipsawing in the short-term should be expected here as the stock works to break the $20 ceiling and we would look to capitalise on any short-term weakness down to $18 support. Right now we see strong positive signalling combining well with growing momentum across our key timeframes and think it might just be a clever move to pick up some WiseTech.


This report was produced by Taylor Securities Pty Ltd, which is a Corporate Authorised Representative (Number 414063) of Bespoke Portfolio Pty Ltd (AFSL 341991). Taylor Securities and Patrick Taylor (Representative number 414064) have made every effort to ensure that the information and material contained in this report is accurate and correct and has been obtained from reliable sources. However, no representation is made about the accuracy or completeness of the information and material and it should not be relied upon as a substitute for the exercise of independent judgment. Except to the extent required by law, Taylor Securities and Patrick Taylor does not accept any liability, including negligence, for any loss or damage arising from the use of, or reliance on, the material contained in this report. This report is for information purposes only and is not intended as an offer or solicitation with respect to the sale or purchase of any securities or financial products. The securities or financial products recommended by Taylor Securities and Patrick Taylor carry no guarantee with respect to return of capital or the market value of those securities or financial products. There are general risks associated with any investment in securities or financial products. Investors should be aware that these risks might result in loss of income and capital invested. Neither Taylor Securities and Patrick Taylor nor any of its associates guarantees the repayment of capital. WARNING: This report is intended to provide general financial product advice only. It has been prepared without having regarded to or taking into account any particular investor’s objectives, financial situation and/or needs. Accordingly, no recipients should rely on any recommendation (whether express or implied) contained in this document without obtaining specific advice from their advisers. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. Where applicable, investors should obtain a copy of and consider the product disclosure statement for that product (if any) before making any decision.

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