Today, our ASX stock of the day is Wiseway Group Ltd (ASX: WWG). The Wiseway share price was going ballistic this morning, up 30.56% to 24 cents a share. Wiseway shares closed at 18 cents a share yesterday, but opened at 20 cents a share this morning before rocketing up even higher. The share price has retreated back to 20 cents at the time of writing.
Today has seen a new 52-week high for the company (24 cents), although Wiseway has had a highly volatile year on the ASX so far. The Wiseway share price got as low as 3.2 cents a share back in August, meaning any investor who bought in at those lows is now looking at a 650% gain today. However, Wiseway shares were trading as high as 46 cents a share back in November 2018, so this company hasn’t exactly been a long-term winner so far.
But what does Wiseway do, and what is causing today’s dramatic movement in the Wiseway share price?
What does Wiseway do?
Wiseway describes itself as “one of the leading forward freight companies in Australia”, offering “extensive high-quality services for the whole Australia wide and globally”.
Wiseway services all aspects of international forwarding and logistics, including air freight, sea freight, customs clearance, transportation, warehousing, distribution, and logistics solutions.
The company prides itself on offering its services at “economical costs”. It does this by prudently outsourcing multiple facets of their business to keep expenses down, whilst still providing “all export and import related activities under one roof”.
Why is the Wiseway share price rocketing today?
Wiseway released a trading update for the quarter ending 30 September to the ASX this morning before market open. The company told investors that, during the quarter, revenues were up 53% to $31 million. This was up $10.7 million from the prior corresponding period. The $31 million in revenue for FY2021 so far compares favourably with the total revenue of $102.6 million that the company banked in the entirety of FY2020.
The company reported revenue across 8 segments: Air freight, sea freight, perishables, airtruck road transportation, Airnex cargo sales agent, imports and distribution, New Zealand, and China.
China shipments fuel growth
The vast majority of these segments saw massive growth across the quarter. Chief amongst these was perishables, which exploded 576% from the 2019 quarter’s revenue of $600,000 to the 2020 quarter’s $4.2 million. Wiseway’s largest segment, air freight, grew by 24% from $17.8 million in 2019’s quarter to $22.2 million in the 2020 quarter.
According to Wiseway CEO Roger Tong, the company’s surge resulted from “trade activity and transaction volumes from China, particularly via major e-commerce platforms”. He added:
As an essential service provider during the COVID-19 pandemic, Wiseway has continued to operate its import and export services between Australia, and Asia. Wiseway’s integrated service offering, through leveraging its relationships with key distribution partners, has enabled delivery of customers’ cargo in and out of Asia via a combination of alternative routes.
On the growth in Wiseway’s perishables division, Mr Tong said:
The standout was the stellar performance in our perishables business, of exporting fresh produce, live seafood, chilled seafood, chilled fresh milk and chilled meat… The market for imported fresh produce in China is seeing unprecedented growth in demand, for which Wiseway is perfectly positioned to deliver on.
Where to from here for Wiseway?
The company was quick to caution investors that the outlook for the rest of FY2021 was unpredictable, even though “demand for logistics services remains high”. Of course, the company says it remains very bullish on the future, noting that its importing services for general cargo and e-commerce, now fully set up, are gaining momentum… up 182% on the previous year’s quarter.
Overall, Wiseway’s performance shows the positive impact the pandemic has had on certain industries, in this case, logistics. It will be interesting to see where the company goes from here.
Forget what just happened. We think this stock could be Australia’s next MONSTER IPO…
One little-known Australian IPO has doubled in value since January, and renowned Australian Moonshot stock picker Anirban Mahanti sees a potential millionaire-maker in waiting…
Because ‘Doc’ Mahanti believes this fast-growing company has all the hallmarks of genuine Moonshot potential, forget ‘buy now pay later’, this stock could be the next hot stock on the ASX.
See how you can find out the name of this stock
Returns as of 6th October 2020
Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
