ASX Slides | Wistech’s Wild Ride

7 December 2019

Global markets​ were higher overnight ​as Wall Street’s main ind​ices broke ​a three-day losing streak following a report that the United States and China were moving closer to signing a “phase one” trade deal. ​Trade War news flow continues to drive investor sentiment, and as we have discussed in the past we believe this dynamic will continue for some time, given there are no "short term solutions" to the trade war.

Stock in Focus: Wistech Global (WTC:ASX)

​WTC shares pulled back significantly after being attacked by a short-seller who alleged WTC is overstating its profit and revenue, saying "WTC is using uniquely confusing accounting strategies to exaggerate growth and income". 

Accordingly, WTC have rejected the claims of financial impropriety and irregularity contained in the report. We would also note that short seller reports should be taken with a grain of salt, as the writers make money when the share price falls. WTC shares slipped further after their AGM where they reiterated that WTC remain on track to achieve their previous guidance for both revenue and earnings for the 2020 financial year – with the market anticipating another guidance upgrade. The presentation provided investors with a breakdown of its performance for the 2019 financial year which was underpinned by significant organic growth in revenues across its global business. It was also supported by the development of hundreds of product enhancements and features for its CargoWise One technology platform, and the acquisition of many strategic assets in new geographies and adjacent technologies. As well the massive market opportunity WTC has improving the efficiency of a capital intensive $16 trillion industry. 

WTC is a quality company, however we are cautious around its valuation even after the heavy pull back. The market continues to price in a tremendous amount of growth as is still one of the most expensive tech companies in the world – based on both earnings and sales multiples. We are still wary on the risk that WTC may miss the markets lofty expectations severely punishing the share price as it has done previously and believe that risk outweighs upside potential at the current valuation

We currently have a HOLD rating on WTC.

   
Australia & New Zealand Market Movers

​The Australian market​ continued to sell-off yesterday (ASX 200 index -1.48%) investors were once again spooked by comments from the Trump administration on trade. The major mining stocks led the market declines on Wednesday following a slide in bulk and base metal prices. Rio Tinto share​s​ ​also ​slipped ​as​ the miner’s $US1.5 billion ($2.2 billion) Utah copper project extension was tempered by news its South African operations had been disrupted by nearby violence. oOh!Media was a standout on the local market on Wednesday, soaring 2​3% after upgrading its earnings guidance.

The New Zealand market ​was a touch lower on Wednesday​ (NZX 50 index -0.​1​6%)​ ​ ahead of major regulatory decisions on domestic banking and fuel markets today. Fonterra was slightly higher after whole milk powder prices held up at the latest Global Dairy Trade auction, despite a decline in butter and milkfat prices. Fonterra Cooperative Group is due to announce its first-quarter earnings today. Outside the benchmark index, Hallenstein Glasson Holdings fell after it said margins remained under pressure, despite a 7.1% increase in first-quarter sales.

 

3 Things Markets Will be Watching this Week

  1. ​In NZ, t​he RBNZ ​is ​due to announce the new capital requirements for NZ banks and the ComCom due to release the final Fuel Study report.
  2. The Reserve Bank of Australia meets on Tuesday and markets expect the bank to keep interest rates on hold.
  3. Closely followed US payroll and manufacturing surveys are released this week. ​
     

 

Have a Great Day,
 

Team

Global markets​ were higher overnight ​as Wall Street’s main ind​ices broke ​a three-day losing streak following a report that the United States and China were moving closer to signing a “phase one” trade deal. ​Trade War news flow continues to drive inve

Do You Want Daily Market Insights?

If you’re interested in staying up-to-date with the latest news and analysis on stocks, be sure to sign up to BlackBull Research.

1 Month Free Trial

Access our expert stock market research Free of charge with no obligation

Free 1 Month Free Trial

Unlock this article & access our expert stock market research

ASX, NZX & USD Stock Buy, Hold, Sell recommendations. Model Portfolios. Daily news and more

[pmpro_checkout]