DCF Studio

    WTC.AX · ASX · Technology

    WiseTech Global Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 14.18

    Market price

    AUD 32.06

    Implied upside

    -55.8%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 1.4042

    AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.
    AdjustedOnly 3 year(s) of history available to anchor assumptions on.
    AdjustedReports in USD, trades in AUD. Modelled in USD, converted at the end.
    AdjustedCapital expenditure runs at 17.5% of revenue against depreciation of 5.9%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.

    Current EV/EBITDA of 42.3x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    AUD 14.18-55.8%
    Exit multiple
    AUD 47.29+47.5%
    Market price
    AUD 32.06

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m105m211mFY25FY26FY27FY28FY29
    Nominal FCFFDiscounted to todayUSD
    LineFY25FY26FY27FY28FY29CAGR
    RevenueUSD 880.9mUSD 1.1bnUSD 1.4bnUSD 1.8bnUSD 2.3bn+26.5%
    EBITUSD 292.4mUSD 370.0mUSD 468.1mUSD 592.3mUSD 749.4m+26.5%
    NOPATUSD 209.6mUSD 265.2mUSD 335.5mUSD 424.5mUSD 537.0m+26.5%
    Add depreciation & amortisationUSD 51.6mUSD 65.3mUSD 82.6mUSD 104.5mUSD 132.2m+26.5%
    Less capital expenditureUSD -154.3mUSD -195.2mUSD -247.0mUSD -312.5mUSD -395.4m+26.5%
    Less increase in working capitalUSD -24.6mUSD -31.1mUSD -39.3mUSD -49.8mUSD -62.9m+26.5%
    Free cashflow to firmUSD 82.3mUSD 104.1mUSD 131.7mUSD 166.7mUSD 210.9m+26.5%
    Discount factor0.94600.84660.75770.67810.6068-
    Present valueUSD 77.9mUSD 88.2mUSD 99.8mUSD 113.0mUSD 128.0m+13.2%
    Present Value Of The ForecastUSD 506.8m

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.35%Australian Government 10-year (RBA F2)
    Equity risk premium6.00%Market assumption
    Beta1.071Reported 1.106, pulled toward 1.0 (Blume)
    Cost of equity11.77%Risk-free + beta x equity risk premium
    Cost of debt8.82%Interest expense / average total debt
    Market capitalisationUSD 10.8bn99.4% of capital
    Total debtUSD 69.8m0.6% of capital, book value as a proxy
    Tax rate28.3%Effective, capped at statutory
    WACC11.74%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 10.10

    85% of EV

    Forecast FCFF, final year
    USD 210.9m
    Capex at depreciation, working capital in reinvestment
    USD 537.0m
    Less reinvestment at g/ROIC (21.3% of NOPAT)
    USD -114.4m
    Capitalised
    USD 422.7m
    ROIC (WACC floor)
    11.7%
    Terminal value, undiscounted
    USD 4.7bn
    Terminal value, discounted
    USD 2.8bn
    Enterprise value
    USD 3.4bn
    Less net debt
    USD -11.6m
    Equity value
    USD 3.4bn

    Exit at 20.0x EBITDA

    Value per shareUSD 33.68

    95% of EV

    Terminal value, undiscounted
    USD 17.6bn
    Terminal value, discounted
    USD 10.7bn
    Enterprise value
    USD 11.2bn
    Less net debt
    USD -11.6m
    Equity value
    USD 11.2bn

    Spread between methods: 108%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    9.74%12.8212.9213.0313.1613.29
    10.74%11.2211.2711.3211.3711.41
    11.74%10.0210.0610.1010.1410.18
    12.74%9.019.059.089.129.16
    13.74%8.168.198.228.268.29

    Outlined: this model. Green text: above today's price of 22.83. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year26.5%50.8%+24.2pp
    EBIT margin33.2%67.2%+34.0pp
    Discount rate11.7%6.9%-4.8pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.