PAX Chairman Nie Guoming introduces the firm's product line to investors in Hong Kong. Photo: Randy Chung, Aries ConsultingPAX GLOBAL Technology Ltd (HK: 327), China’s top Electronic Funds Transfer at Point of Sale (EFT-POS) terminal solutions provider and No.4 globally, saw its 2012 top line rise 19% to over 1.3 billion hkd.
The Hong Kong-based firm improved its bottom line 12% to 203.3 million hkd.
Management said an expanding global reach is a key investor draw.
“Our overseas growth will become our major selling point and top investment highlight,” said PAX Global Chairman and Executive Director Nie Guoming at an investor briefing in Hong Kong organized by Aries Consulting last Friday.
EFT-POS terminal sales last year reached over one million units.
In 2012, PAX invested 82.8 million hkd in R&D, up 57% from a year earlier.
PAX credits its commitment to technological innovation to its frequent leapfrogging up the ladder to become China’s top EFT-POS play despite intense competition.
PAX Global’s global ranking in EFT-POS terminals shipments has climbed three spots to No.4, from No.7 in 2010.
Cashless Society: PAX Global is China’s No. 1 player in EFT-POS (electronic fund transfer point of sale) terminal solutions products. Photos: PAX Global
“The Group has strengthened its product R&D efforts and expanded its global sales force with pleasing outcomes reflected in its financial results.
“PAX Global’s R&D team has expanded by about 30% which helps to proactively maintain our superior technology standards,” Mr. Nie added.
Overall, executives at the firm were pleased with their full-year performance, achieved at a time when the global economy was still struggling to regain traction.
“During the year, the Group has achieved satisfactory results in accordance with its business development plans,” Mr. Nie said.
The new political leadership in Beijing has restated its goal of promoting urbanization and spurring domestic demand in the face of sluggish traditional export markets.
And the firm’s chairman added that PAX’s strategy of boosting market share and inheriting new technology will also continue via non-organic means.
“PAX will also conform with the government’s urbanization policy as well as cooperate with commercial banks and other operators to broaden the market breadth of electronic payment systems.
“In addition, we will wisely utilize financial resources to achieve sustainably fast business growth, and will continue to eye potential M&A opportunities which can improve the Group’s know-how further or increase its total market share.”
He said the ultra-competitive pricing environment for EFT-POS products meant maintaining a technological edge over rivals was all-important.
“We rely mainly on our technological advantages to protect our ASPs.”
In FY2012, the sale of EFT-POS terminals generated the majority of the Group’s revenue, with sales of these flagship products up 24% to nearly 1.2 billion hkd thanks to an increase in sales revenue from both overseas and China.
PAX Global filled a room in Hong Kong with investors eager to hear about its 2012 results and future strategies. Photo: Randy Chung, Aries Consulting
Geographically, sales revenue from overseas markets rose 13% to 394.3 million hkd, largely attributable to robust growth in sales of EFT-POS terminals to markets in Europe, the Middle East and Africa (EMEA).
Overseas market turnover contribution rose to 30% in 2012 from just 22% in 2010.
“We believe this trend will continue,” Mr. Nie said.
PAX continued to increase the number of distributors to further strengthen its sales efforts in overseas markets.
As for the domestic China market, PAX sustained steady business growth, with domestic sales revenue rising 22% to 918.9 million hkd in 2012.
Over the same period, China’s retail industry remained robust, with total retail sales in China increasing 14.3% in 2012, thus providing a strong demand backdrop for PAX’s products.
As for the China market, PAX has closely monitored business opportunities generated from the ever-evolving payment market.
In anticipation of tremendous growth in demand from third-party payment operators, PAX has heightened R&D efforts to develop brand new EFT-POS terminals products catering to the operators.
Third-party payment operators are increasingly prominent as payment counterparties in China, apart from China UnionPay Merchants Services (UMS) and financial institutions.
As of end-2012, the Peoples’ Bank of China – the country’s Central Bank -- had issued more than 190 payment licenses for the operators, of which over 40 possess the capability to receive payments, and those operators have already launched the installation of EFT-POS terminals.
“Rural POS terminals will become increasingly more common in China. Also, the Central Bank is targeting credit cards and debit cards to be unified and standardized in terms of POS usage across China by 2015,” Mr. Nie said.
PAX expects the emerging sector of operators will stimulate future business growth in China.
Looking forward, PAX will continue to build upon its current business foundation to grasp additional market share around the globe, thus further solidifying its leading foothold in the international EFT-POS terminal industry.
PAX shares are recently at 1.70 hkd, with a 52-week range of 1.00 - 2.17 Source: Yahoo
The Group has executed its plan of “Global Presence” and will proactively develop overseas markets by stepping up marketing efforts to develop sales in emerging markets with low EFT-POS terminal penetration such as EMEA.
India, Nigeria, South American countries, Central Asia and the Middle East represent new markets for PAX to develop.
Developed markets including the US and Canada are showing new demand for the Group’s NFC-compatible EFT-POS terminals, as a result of continued marketing efforts to promote contactless cards such as payWave.
In sum, PAX believes overseas markets will continue to maintain fast growth.
See also:
PAX GLOBAL: China's Top EFT-POS Play Looking To Climb Higher
MAGIC Shines; PAX Impresses
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