Firstly, I'm no professional writer, I make money trading markets. But to help add more context for those still in doubt why there will be a material decline in valuations to 100x forward P/E in the next couple weeks, here's some food for thought. Make of it what you will. I put my money where my mouth is in going short:
LGFF (large global freight forwarder) rollouts (18pp CAGR in the past). See exhibit 48 below on how fast this growth really is. All slowing down.
New customers/existing customers/new products. Again see exhibit 48 on forecast growth is. All slowing down. Neo & BCOs. This will take more investment and time. RW has been talking about it for years now. Barely any updates since.
Landside logistics & TMS growth will drive upside yes. Revenue growth. But profitability barely.
Blume & Envase margins: Blume is the bigger acquisition here with FY24 projections of 5% margin [$5m contribution]. Envase = 20% margins [$13m contribution]. Yes big revenue growth but does this translate to profitability? Not to mention the competitive landscape that they play in.
Expect more acquisitions to achieve their global growth, particularly customs only ~50% penetration that their current acquisitions and existing capabilities cover of their targeted 90% coverage of global customs.
More acquisitions = more debt and more dilution to current shareholders.
CargoWise is the core engine. Landside & TMS play will be margin dilutive. Integration will take many years and cost more $.
Why buy a company in the first place? To get a return. Capital gains from here are baked in. Income from dividends, useless. That’s why it’s overvalued at $29bn market cap. You would have to wait 50+ years inclusive of growth to see any meaningful return at these valuations. Dividend yield, based on NPAT. Come back in 5 years to make fat dividends? The dividend yield is 0.2% currently. Sure, it will grow to 0.3% then 0.4% based on the 20% payout ratio of NPAT. Even my Macquarie 6 month term deposit at 5% pays many multiples more in return.
RW selling = more supply. No new substantial holders = small fish are buying his shares up at these high prices. What happens when they realise they overpaid and decide to get out at all costs = prices tank as no one else wants to buy at these high valuations
Yes short trading it for the near term based on overdone valuations. I’ve been long before more times than short when I saw value but this time, it’s an easy sell.
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