Stocks’ Details
 

WiseTech Global Ltd

Acquired two leading European customs solutions providers: WiseTech Global Ltd (ASX: WTC) that has some competitive advantage with regards to its moat, has upgraded its FY18 earnings guidance and expects revenue to be within the range of $207 to $217 million, up 3% from earlier guidance. The EBITDA guidance was maintained at the same level. The group now acquired two leading European customs solutions providers, ABM Data Systems (Europe) & CustomsMatters (Ireland). These acquisitions are expected to be consolidated into WTC accounts from February 2018. However, with combined 2016 annual revenue and EBITDA of approximately $4.1m and approximately $0.8m respectively, these transactions do not look material to WTC. Further, these transactions are in line with the company’s strategy of accelerating long-term organic growth through targeted, valuable acquisitions across new geographies and larger, globally capable adjacencies. WTC is looking for opportunities in key target regions of Europe, Asia and Latin America and additional adjacencies. On the other hand, Richard White had sold 5.823m shares (approx. 2.0%) in the capital of WiseTech Global to facilitate liquidity at the time of WTC’s entry into the S&P/ASX 200. Now, after the completion of the procedure, Richard White continues to have voting control of over 154.1m WTC shares, which represents approximately 52.94% of the issued capital of WTC. Meanwhile, WTC stock has risen 59.08% in three months as on January 4, 2018 and is trading at a very high price to earnings ratio. The enterprise value relative to revenue looks unreasonable when compared to peers. Based on the foregoing, we give a “Sell” recommendation on the stock at the current price of $14.11  
 

Lovisa Holdings Ltd

Trading Update:While many retail stocks face sector-driven headwinds, Lovisa Holdings Ltd.’s (ASX: LOV) stock was seen to rally 17.2% on January 5, 2018 as in the first half of FY18, the sales increased 18.8% on last year and up 7.4% on a comparable store basis. The comparable sales grew as Christmas and Boxing Day sales periods performed ahead of expectations. As a result, now LOV expects EBIT for the half year ended 31 December 2017 to be in the range of $34.5m to $35m, being an increase on the prior year of between 22% and 24%. Meanwhile, LOV stock is trading at a high level and the catalysts seem to be factored in the recent rally. The group’s FY17 ROE was also down from the FY16 figure given the retail sector landscape. We believe that investors can benefit from the stock price rise while the stock looks “Expensive” at the current price of $7.90

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