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WiseTech share price rises as second short rebuttal is issued

WiseTech’s second response to Jcap’s second short attack looks to have been well received by the market, with the WTC share price rising after exiting its trading halt.

WiseTech (ASX: WTC) has today staunchly responded to the second short report issued by Jcap on Monday.

In a six page rebuttal, WiseTech – the global SAAS logistics company – flat-out rejected Jcap’s second report, noting that many claims within it were simply wrong.

Tellingly, when the WiseTech share price resumed trading today it soared 8.44% to A$28.5 per share in the first thirty minutes of trade. Even this optimism was somewhat short-lived however, with the stock levelling off to around A$27.38 per share in the next couple of hours.

Attrition, investment and acquisitions

The company used today’s media release to refute many of Jcap’s claims, from both its first and second short reports.

On the front-line, WiseTech reiterated its strong global reach and impressive customer retention rate. Indeed, as we previously wrote, WiseTech has an exceptionally low attrition rate of just 1%.

On the matter of organic growth – which formed a core part of Jcap’s first short attack – WiseTech further noted that its organic growth is strong, citing an ‘average organic growth range of 20%-30% per annum.’

Specifically, during FY18 and FY19 organic growth figures came in at 37% and 33%, respectively.

On the claim that WiseTech's acquisitions are poorly integrated and underperforming, the company commented that its primary focus on acquisitions is to bring new entities into the 'WiseTech group [so as to] amplify knowledge, resources and access to new markets, or accelerate the convergence of technology.’

Claims that the company doesn't invest significantly in its technology and products were also knocked down. Here, WiseTech noted that:

‘In FY19, we invested over $113m, in maintaining and adding new developments to our products and technology pipeline for both CargoWise One and our adjacency and geographic acquisitions.'

FY20 guidance in focus

WiseTech (ASX: WTC) also used today’s announcement to reiterate its 2020 outlook; with the company confirming 'our guidance for FY20 of revenue of $440m - $460m, with revenue growth of 26% - 32% and EBITDA of $145m - $153m with EBITDA growth of 34% - 42%.'

WiseTech share price: where next?

Even when considering all this, where the share price will head in the short or for that matter, medium-term looks hard to determine.

The market seemed either unconvinced by WiseTech’s first response – or maybe more realistically – not wanting to tolerate the risk associated with a company under attack by an aggressive, internationally-based, short seller.

Jcap’s opportunistic second report likely didn’t help matters.

Yet today’s bounce – which saw the WTC surge 8% at first (now at a more modest 6%) – may suggest that this dynamic has changed; that faith in WiseTech has potentially been restored.

Even so: the high-low share price range was extreme: between the A$24.32 and A$29.38 mark – before noon.

I guess we’ll just have to wait and see what else Jcap has left up their sleeve.

Short report mark-3 perhaps?


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