Accelerating long-term organic growth: WiseTech Global Limited (ASX: WTC), a Global logistics solutions group announced acquisitions of two leading Latin American freight forwarding and logistics solutions providers, Forward and Softcargo, and a leading French customs solutions provider, EasyLog. Latin America is a key trading region that continues to grow in importance to the US and other world markets. Bringing Forward and Softcargo, which together provide freight forwarding solutions to 16 countries across Latin America, into the WiseTech Global group, in addition to the leading Brazilian customs solutions provider Bysoft, which it acquired in 1H18, comprehensively fills out WTC’s coverage and gives it a very strong presence across the region. EasyLog joining the WiseTech Global group is the key next step in building out WisTech’s European customs’ capabilities. With France, the second largest importer and exporter in Europe, accelerating its customs footprint domestically is essential, and complements the recent European acquisitions in Belgium, the Netherlands, Ireland, Germany and Italy. The aggregate consideration for these acquisitions comprised of AUD $10.1m upfront plus further multi-year earnouts of up to AUD $14.9m related to activities for integration, native CargoWise One product development, customer conversion and revenue growth.
 
While of strategic value, these transactions are not material to the WiseTech Global group, with Forward, Softcargo and EasyLog together providing combined 2017 annual revenue of AUD ~$6.7m and AUD ~$0.8m contribution to EBITDA. All three acquisitions, Forward, Softcargo and EasyLog, are expected to be consolidated into WiseTech Global accounts from May 2018. Lately, WTC acquired LSP Solutions, a leading provider of customs and warehouse management solutions in the Netherlands. The Group released its 1HFY18 results and reported an increase of 31 per cent and 32 per cent in the revenue ($93.4 million) and EBITDA ($31.8 million) respectively. But there was a decrease in free cash flow ($11.9 million) that is by 19 per cent as compared to the previous half year. With the recent acquisitions highlighted by the group, the balance sheet may witness some more impact.
 
WTC expects to achieve a revenue and EBITDA growth of 35 per cent- 41 per cent and 32 per cent- 39 per cent respectively. The stock prices have declined since the start of the year that is by 30.4 per cent and were down by 9 per cent in the past five days as at 24 April 2018. The stock looks “Expensive” at the current market price as it still trades at a high PE level.
 

Trend of Revenue Growth (Source: Company Reports)

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