- WiseTech, a supply logistics company valued at $10.2 billion, has had its share price rattled after independent researcher J Capital published a scathing report
- J Capital Co-Founder and Research Director Anne Stevenson-Yang said WiseTech may be over stating its profits by as much as 178 per cent
- In the “Illusion of Success” report, J Capital also accused WiseTech of faking 25 per cent organic growth numbers by as much as 15 per cent
- Shares in WiseTech have devalued by 10.2 per cent today, trading at an even $30 with the company now in a trading halt
Update AEDT 6:30pm: WiseTech has since responded to J Capital’s allegations, calling them “untrue”.
“We are very concerned that the allegations in the document may mislead and manipulate the market to the detriment of WiseTech’s business and its shareholders, large and small,” CEO Richard White said in a media release.
“Our financials, our revenue, our profit, our growth rates and our product have all been verified comprehensively and form part of the external independent audits conducted annually.”
Original article posted October 17
WiseTech has dropped 10.2 per cent today as the supply chain logistics company came under fire for allegedly overstating its profits.
The company, worth over $10 billion, fell into the crosshairs of independent research company J Capital.
China-based J Capital, a self-professed short seller, claimed WiseTech has an illusion of success in its 31 page report.
In the report, J Capital Co-Founder and Research Director Anne Stevenson-Yang writes the company may be overstating its profits by as much as 178 per cent.
$WTC #wisetech (WTCHF US) WiseTech is a clunker. It began life in 1994 and was unspectacular for 20J Capital’s Twitter continues to litter scathing posts aimed at the supply chain company
years. Cobbled together through hasty acquisitions. Its core product is held in low regard by clients. pic.twitter.com/0ABySallIi— J Capital (@JCap_Research) October 17, 2019
“Simply put, the auditors aren’t looking at the numbers closely enough,” Anne Stevenson-Yang said.
“WiseTech’s Australian subsidiaries, through which much of the international revenue has been channelled, have been shielded from audit scrutiny.”
The researcher also claimed WiseTech is faking its claims of 25 per cent organic growth, alleging the real number is closer to 10 per cent instead.
“That means an estimated 80% of the company’s top-line growth is from purchased revenue,” Anne said.
Shares in WiseTech closed yesterday on the Australian market at $33.44. Since market open today, shares in the company began to degrade gradually. It didn’t take long for the company to plead a pause in trading.
With shares idle at an even $30, a degradation of 10.1 per cent, WiseTech is now in a trading halt.
The J Capital report also claimed WiseTech has inflated its profits since early 2016 by 178 per cent — attributing to its $10.2 billion valuation today.
“WiseTech appears to be making it deliberately difficult, if not impossible, to reconcile its summary of acquired revenue with earlier reports,” Anne said.
You try making out what $WTC #WiseTech ($WTCHF US) is talking about in its reports; I certainly can’t. They compare two years of revenue to one, 18 months to 12, so weird. Full report https://t.co/FDJIj2XuxX. @RampCapitalLLC@investorsbeware @unemon1— ASY (@doumenzi) October 17, 2019A tweet from today, posted from Anne Stevenson-Yang’s personal account
Anne also claims that whenever WiseTech makes an acquisition, it moves a portion of invoicing to unaudited subsidiaries to further inflate revenue gains.
“We suspect that the company may be inventing some of these new revenues,” she said.