PAX GLOBAL TECHNOLOGY (HK: 327), China’s top electronic fund transfer point-of-sale (EFT-POS) firm, recently jumped to the global No.3 spot from No.7 in just two years.
PAX Global's chairman, speaking at the Aries Consulting-sponsored “Braving the Waves: China Investment Strategies 2013” conference, said PAX had even bigger plans in store, and well as some plans 'out of store'.'
“We are the fastest growing EFT-POS player in the world and are benefitting from the very strong support of these systems by all the world’s major banks,” said Mr. Tiger Nie.
Speaking at last week’s investment conference in Shenzhen featuring China, Hong Kong and Singapore-listed firms, Mr. Nie said his clients were potentially limitless and spread across a growing array of commercial sectors, basically, wherever transactions were made.
“Our products can be found in shops, malls, department stores, restaurants, entertainment facilities and even hospitals, and we are always looking for new market venues to penetrate.”
As China’s leading EFT-POS terminal solutions provider, the PRC still had a low payment terminal penetration rate of less than 20%.
“PAX enjoys huge opportunities for growth,” Mr. Nie added.
On the international stage, global EFT-POS plays Ingenico (ING: FP) and Verifone (PAY: US) have both been aggressively acquiring smaller rivals to expand their economies of scale.
“With fewer competitors in the international market and restructuring taking place from the two giants, PAX has huge potential to spread its business scope in overseas markets,” Mr. Nie said.
PAX boosted its R&D staff from 203 at end-2011 to 300 now, with an eye on further raising its technical expertise to access even more foreign markets.
Mr. Nie said benefits from this campaign include new export markets such as Brazil, Russia, the Mideast, Africa and other regions – all of which offer potentially higher-growth areas.
“PAX Global has made a significant push into the banking and commerce markets, with management aiming to have a 10% share of global output of POS terminals by 2015, up from 5.5% in 2011."
He added that as far as cashflow operations are concerned, the second half is the peak season for collecting cash so it's possible for the year 2012 to turn out to be in a positive cashflow situation.
And the firm’s management targets achieving 50/50 contribution on revenue for both overseas and PRC markets in three years’ time.
In fact, the firm is well on its way to achieving this as exports contributed 41% of total revenue in 1H2012 where as they only accounted for 18% in FY2009.
In the January-June 2012 period, revenue grew 17.4% year-on-year to 530 million hkd while net profit shot up 24% to 83.4 million.
PAX said the improved performance was mainly due to higher export margins and steady expansion into new markets.
In the growing interconnectedness of the modern world, with many people having several online-ready gadgets connecting them to both peers and strangers, we have all become closer than ever before – at least in a virtual sense of the word.
However, this 24-7 connectivity and mutual accessibility has also left the more tech-reliant among us more open and vulnerable to unwanted attention from those who might not have our best interests at heart.
“Players in this industry must be very advanced, technically, and employ high safety and security features. Once they reach this threshold, then their products are in great demand as they provide all parties to a transaction with a cashless means of doing business with electronic proof of every deal automatically recorded
“The technology in our sector is very advanced and reconfigures itself often and rapidly. Therefore, our No.1 market share in China’s EFT-POS sector is protected by a high entry barrier thanks to our advanced technology,” Mr. Nie said.
He added that this led to two other beneficial industry characteristics for PAX Global... few players and high margins.
Mr. Nie, who began his career working at the headquarters of China Merchants Bank in the PRC as an engineer in the Information Technology Department, said he has witnessed the meteoric rise of EFT-POS systems over the years.
“For PAX itself, we have grown very rapidly, recently leapfrogging past four foreign rivals to land at the world’s No.3 spot in just two short years. Most of this growth was actually due to M&As, and we have bought a rival or two to get where we are today,” he said.
PAX Global’s countertop and mobile EFT-POS terminals can now be found in over 75 countries.
Its products include EFT-POS terminals, consumer activated devices, contactless devices as well as EFT-POS software and services.
He said that it wasn’t just shops and restaurants that were ideal locations for EFT-POS terminals, but perhaps private residences down the road.
“We do see potential for home-use sales, but we are still looking into possible commercial applications,” Mr. Nie said.
Part of the appeal of personal cards that might be swiped at home-use terminals is that the transaction was nearly impossible to hack into – unlike online shopping accounts -- thanks to the unique electronic strip on the back of each smartcard.
Will PAX be coming into your living room soon?
We'll be watching.
See also:
MAGIC Shines; PAX Impresses
Tech Tally: PAX Gets ‘Buy’, EV Play BYD ‘Sell’
