WiseTech boss fires back at short-seller J Capital Research

WiseTech global’s latest strike back at a short-seller attack has been welcomed by shareholders. This is Richard White’s “worry”.

WiseTech CEO Richard White. Picture: Britta Campion

WiseTech Global boss Richard White has warned that short-sellers are going to drive technology businesses away from listing on the ASX, as the logistics software company counts the cost of the ­attack mounted by hedge fund J Capital Research.

“I really worry about the loss of the next generation of aspirational technology entrepreneurs, investors and leaders that might be considering listing or trading on the ASX,” Mr White said.

“They may well be repulsed by these types of attacks on Australian listed companies.”

WiseTech shares jumped 8.5 per cent to finish the session at $28.53, after coming out a trading halt on Wednesday. With the two reports from J Capital wiping close to $2bn from WiseTech’s books, Mr White said shareholder reaction wasn’t driven by concrete data about the business, which was in good health.

“We are dealing with psychology here rather than information,” he told The Australian.

“We have very comprehensive and detailed information about our business and our customers for investors. However, none of it prevented J Capital from creating its reports.

“They didn’t ask us any questions, they didn’t really do any research on our data and what they wanted to do was lob a bomb in the market during trading.

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“I can’t fix J Capital, they are overseas, they are outside of our reach and that of others, but what we can do is continue to grow our business.” J Capital’s reports have taken aim at WiseTech’s growth through its acquisition strategy and alleged the software maker could be overstating its profit by as much as $116m, or 178 per cent, over the past three years.

Mr White said the reports had fundamentally misrepresented the nature of WiseTech’s business and its overall health.

“We reject entirely the unfounded allegations of financial impropriety and operational misrepresentation,” he said. “We are subject to comprehensive and independent verification and audit processes and I can assure you that the business is in great shape.

“I can assure you that our (customer) attrition rate, our customer reach, our product quality, our revenue are all absolutely crystal clear.”

Mr White, who holds a 48.8 per cent stake in WiseTech, also stood by the company’s aggressive acquisition strategy, which has raised investor anxiety in the past.

“This has been a perennial issue and I want to reiterate that none of the acquisitions are large compared to our business,” he said.

“Imagine trying to get into a foreign language country, with deep customs and border enforcement laws; and complex government regulations.

“Without local people and local knowledge there is no organic strategy that would work. Any ­organic strategy will take 10 times longer, could fail and will cost more.

“This is not some sort of revenue roll-off, it’s the only way to grow the business globally.”

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With J Capital’s report also casting doubts on the popularity of WiseTech’s CargoWise One platform, Mr White said the product was market leading.

“All 25 of the top 25 global freight forwarders are customers, as are 43 of the top 50 global third-party logistics providers. However, we are still in early penetration of both new and existing customers,” he said. “Of these, 22 of the 25 global freight forwarders are using CargoWise One specifically (not six as claimed in the report).”

He also took aim at J Capital basing parts of its reports on feedback provided by the software maker’s competitors.

“It’s a ridiculous idea to ask competitors about what they think about (our business),” he said. “We understand that’s what has been done here; and we also think that (J Capital) doesn’t quite understand the industry. “Our commercial model is quite different to our competitors and that’s something J Capital has sought to misrepresent a number of different ways.”

WiseTech has reiterated its guidance for the 2020 full year, with revenue expected to land between $440m and $460m and earnings before interest, tax, depreciation and amortisation of $145m-$153m.