The WiseTech Global Ltd (ASX: WTC) share price has continued its disappointing run in morning trade.
The logistics solution company's shares are down 3.5% to $18.37 at the time of writing.
Why is the WiseTech Global share price in the red?
This morning WiseTech Global downgraded its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) guidance following the acquisition of Containerchain.
According to the release, Containerchain is a leading container optimisation solutions provider to the container shipping and landside container logistics communities in Asia Pacific, Europe, and the United States.
The Singapore-based company is the market leader for containerised solutions in Australia, New Zealand and Singapore and provides real-time tracking, automation, connectivity, operational planning and container visibility across the supply chain. It currently covers more than 5 million import and export container movement notifications annually.
WiseTech will acquire the company for ~A$92 million in cash, net of cash acquired, funded through existing group resources.
Given that Containerchain achieved revenue of $14.4 million and no EBITDA in FY 2018, this is quite a premium. But management believes there are significant synergy opportunities post-transaction "from redeploying resources, facilitating more efficient and effective development, and the re-use of technology into the CargoWise Nexus platform."
WiseTech Global founder and CEO, Richard White, said: "We see great strategic value in the team's container management technology and expertise and connectivity across landside communities and significant market penetration in Australia, New Zealand and Singapore. Importantly this acquisition further expands our offering and ability to reach new customer segments."
In the short term it is going to boost its revenue but hit its earnings due to one-off costs.
Management has upgraded its full year revenue guidance to between $326 million and $339 million, representing growth of 47% to 53%, and downgraded its EBITDA guidance to between $100 million and $105 million, representing growth of 28% to 35%.
This compares to the guidance given last week with its half year results of revenue of $322 million to $335 million and EBITDA of $102 million to $107 million.
Should you invest?
Whilst I think WiseTech Global is a high quality company and would be a great buy and hold option for patient investors, I would still choose fellow tech shares Altium Limited (ASX: ALU) and Appen Ltd (ASX: APX) ahead of it at this point. Although their respective shares have surged higher in recent weeks, I still believe they are better value for money at current levels.
