WiseTech (ASX: WTC) has issued a second defence of its business, is the share price a buy?
WiseTech Global was founded in 1994 by Richard White to provide software to the logistics sector. Since then it has grown to become a global provider of logistics software, claiming to service 19 of the top 20 logistics companies globally. WiseTech makes money by charging its customers on a ‘per use’ basis rather than as a subscription model. Meaning, WiseTech directly benefits as its customers grow their businesses.
What Has Happened With WiseTech Now?
A second short attack was released and caused the share price to drop further.
This morning the company released its second defence.
Defence Of Its Retention Rate
WiseTech said it provides services to over 12,000 logistics organisations across 150 countries. All 25 of the top 25 global freight forwarders are customers, as are 43 of the top 50 global third-party logistics providers.
WiseTech said that 22 of the 25 global freight forwarders are using CargoWise One (not six as claimed in the report).
Its software can be used as a component of an an-house or legacy system by using specific elements or in specific regions. WiseTech said currently 10 of the world’s largest logistics providers are in full global freight forwarding rollout or in the process of rolling out on CargoWise One.
It also said that there has been significant growth in major customer usage of CargoWise One in the past four years.
It confirmed that CargoWise One customer attrition was less than 1% in FY19, as it has been in the last seven years.
The company also re-iterated that organic growth is strong, that its commercial model is driving transaction and revenue growth, it defended its acquisitions and its integration with acquisitions is going well.
What Now?
WiseTech reaffirmed its previous statements and rejected all of the allegations and irregularity in the reports.
Richard White, WiseTech’s Founder and CEO, said: “Regardless of the noise and market disruption of these short-seller, self-serving and misleading claims, we will continue to strive to ensure our shareholders are informed about the fundamental performance of our business.
“Ultimately, the best way to protect the integrity and value of our business is to rise to the challenge and continue to deliver on what we have set out to do.”
Wisetech is clearly a pretty good business, but I think it’s too expensive for me to want to buy it for my portfolio even now after the declines with today’s quick 7% recovery. I think there are better opportunities elsewhere with less negative attention.
I’d much rather buy the growth shares in the free report below for better value.
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