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Mathematics & Computer Science | AI & Investing | Spain & Switzerland
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Pax Global $HKG: 0327
Disclaimer: These are just my personal notes uploaded. I am sharing them here for anyone interested, however, some parts may not be understandable to others, or could be outdated or inaccurate. Despite this, I hope that these notes offer some value and that someone finds them useful!

PAX Global Technology Limited, an investment holding company, engages in the development and sale of electronic funds transfer point-of-sale products worldwide.
Its E-payment terminal products include:
  • Smart E-payment solutions,
  • Smart electronic cash register solutions,
  • Unattended solutions,
  • Smart PayPhone and PayTablet solutions,
  • Classic E-payment solutions,
  • Other accessory items.
The company also develops PAXSTORE, a cloud-based platform that allows users to create and manage their own independent white-label marketplace for software application distribution; paxRhino, a key injection service; and CyberLab, a payment application cloud test platform that provides professional one-stop online debugging and testing services. In addition, it offers payment solution services and maintenance and installation services.

# News / Events
  • Construction Contracts for the PAX Smart Terminals Industrial Park Project
PAX Smart Terminals Industrial Park Project (the “Industrial Park Project”). The construction work of the Industrial Park Project, as funded by internal financial resources of the Group, is underway. Due to the interruption of construction process under the COVID-19 pandemic, the expected completion of the Industrial Park Project is extended to the fourth quarter of 2023 the earliest. → Expected commencement of production: 2nd quarter of 2024 the earliest
  • Expected additional annual production capacity At least 10 million units (in 2021 they had capacity for 12 million)
  • Liquidation of Shanghai Kashuo
Should Shanghai Kashuo liquidate, the Group is expected to recognize a potential gain of up to approximately HK$60 million in reversal of its existing liabilities.

  • Oct 26th, 2021, the FBI raided Pax’s Florida facility. → Seems like it was nothing

# Macro
  • 🌎 Contactless Payment Terminals Market CAGR 25.86 % between 2018 – 2028
  • 🌎 Global outdoor payment terminal market CAGR 8.7% from 2022 to 2030
  • 🌎 Global point-of-sale terminal CAGR of 8.3% from 2023 to 2030
  • 🌎 Global point-of-sale terminal CAGR of 9.2% from 2022 to 2031
  • 🌎 Irreversible development of global cashless societies has been fueled.
> The ongoing industry shift from legacy payment terminals – running on Linux and proprietary operating systems – towards new generation of Android smart payment terminal solutions, as well as initiatives by national governments and financial institutions to encourage cashless societies, have promoted rapid advances in electronic payment acceptance technology and further adoption of more software applications and value-added services at the retail level. These are the key factors propelling merchants to accelerate the deployment of Android smart payment terminal solutions.

# Business
  • PAX has its subsidiaries in the USA, Italy, Japan, and India.
  • 📖 Approximately 50% of the employees are research & development engineers.
  • 📖 Terminal’s replacement cycle takes place every 5–7 years
  • 📖 Android products sell at higher prices than the traditional ones

### Sales by Geographical Region
  • Latin America and the Commonwealth of Independent States (“LACIS”)
  • 40% of sales
  • +12.9%
  • Europe, the Middle East and Africa (“EMEA”)
  • 34% of sales
  • +62.2%
  • Asia Pacific Region (“APAC”)
  • 14% of sales
  • +3.5%
  • United States of America and Canada (“USCA”)
  • 12% of sales
  • +27.2%

### Sales by Product Category
  • Sales of E-payment Terminals products
  • 98% of sales
  • +26.5%
E-payment Terminals products include Android smart E-payment solutions (A-series), Android smart electronic cash register solutions (E-series), unattended solutions (IM-series and SK-series), Android smart PayPhone and PayTablet solutions (M-series), classic E-payment solutions and other accessory items.

  • Provision of services
  • 2% of sales
  • +6.7%
Services income mainly consists of income generated from the provision of maintenance and installation services and the payment solution services, e.g. SaaS (Software as a Service) solutions.
📖 PAXSTORE ecosystem: payment, ordering, ticketing, inventory handling, marketing & loyalty initiatives, tax refunds, etc

# Management
  • Mr. Nie Guoming [Chairman & General manager of Pax Computer Technology] → 13yrs &
He is responsible for the overall management and strategic development of the Company and its subsidiaries. He joined Pax Technology Limited (“Pax Technology”) at its founding in March 2000 as the vice president until January 2001 and subsequently as the president prior to his appointment as the chairman in June 2010.
  • Mr. Lu Jie [Chief Executive Officer] > 9.75yrs & 0.82%
Responsible for managing the business development, sales and marketing functions of the Group.
  • Mr. Li Wenjin [Executive Director of the Company] -> 0.27%
He is responsible for the Company’s risk management and treasury management and overseeing operations of Pax Technology, of which he has been serving a director since April 2000.

✅ Management tends to be conservative → Pax always beats guidance

# Opportunities
  • 💡 AX Smart Terminals Industrial Park Project in Huizhou → Will substantially increase production
  • 💡 Paxstore increases value for customers and creates switching costs + recurring revenue

# Advantages
✅ Aggressive share buyback (under fair value)
✅ Market share 11.5% (third-greatest player)
✅ Regulated sector → Entry Barriers
  • Local certifications are required. There are only 3 international players: Ingenico (20% market share), Verifone (16% market share), Pax Global.
Change Costs + Semi-recurring Income. The PAX software platform encourages people to buy the same brand again. This combined with the 5-7 year replacement period results in semi-recurring income.
Strong investment in R&D.
  • ~50% of employees are research and development engineers.
  • The slight worsening of operating margins was due to an increase in R&D spending.

# Risks
  • ⚠️ Diluting the shareholders (although very little) by the exercise of options → the maximum dilution in case all the options were exercised would be 7.5%
  • ⚠️ Hi Sun Technology (China) Limited has 33% of the company → There may be a conflict of interest for minority shareholders → They were the owners of Pax Global and carried out the IPO of the company.
  • ⚠️ Danger of customer concentration. → ~45% of sales come from a single customer. This distributor operates in LATAM and is an exclusive client of PAX.
  • ⚠️ Loss of Market Share in China → The board has decided to compete in more profitable international markets. Currently the most important market is Latin America.
  • ⚠️ Danger of “commoditization”.
  • Currently PAX is able to sell its products at a higher price than its competitors due to the high barriers to entry and the importance of security. However, in regions like China (where regulations are more lax), the benefits of this market have eroded due to high cost competition.
  • ⚠️ Danger of disruptive competitors
  • Square: The idea is that when the Square’s merchants and the cash app users transact with each other, they cut out the middleman (Visa and Mastercard).

Some notes about $GBUS (Draft) / Algunas notas sobre $GBUS
DISCLAIMER: I have compiled my own notes for $GBUS for my personal use. They are written in a combination of English and Spanish, as this is how I best process information. I am sharing them here for anyone interested, however, some parts may not be understandable to others, or could be outdated or inaccurate. Despite this, I hope that these notes offer some value and that someone finds them useful!

Gibus S.p.A. designs and produces awnings, pergolas, and shade sails in Italy and internationally. It offers bioclimatic pergolas and accessories, sloped pergolas, and pergola covers and accessories; folding arm, vertical, tension, and dome awnings; and screens zip products, as well as sliding glass doors and zip closures for residential and commercial applications. The company sells its products through its shops, as well as through resellers.

## Acquisition of Leiner GMBH
  • Leiner is a player in the production of high-quality sun protection solutions
  • The product portfolio includes awnings systems, conservatory awnings, folding roofs and terrace roofs (sistemas de toldos, toldos de invernadero, techos plegables y techos de terraza)
  • The Network distribution is composed by more than 700 regional specialist dealers in Germany and the Netherlands
  • 88% of sales in the German Market
  • Fundamentals:
  • Revenue Growth: 27%
  • Revenue FY21A: €35,5m
  • EBITDA Margin FY21A: 13,2%
  • EBITDA FY21A: €4,7m
  • Net Debt FY21A: €5,2m
  • Cross-selling synergies
  • Distribution by Leiner, in Germany, of the bioclimatic pergolas and retractable pergola systems*
  • Distribution by Leiner, in Germany, of patented Click ZIP system
  • Distribution by Gibus in its main markets outside DACH (Italy, France) of terrace roofs by Leiner*

  • Cost efficiency synergies: If each plant can focus on a fewer number of products, productivity can be increased, with each company focusing on the production on one specific range: • Gibus can increase the volume in the production of pergolas • Leiner can focus its energies and production capacity on terrace roofs.
  • R&D Synergies
  • Digitalization synergies:
Salesforce CRM, already adopted in Gibus, can be introduced in Leiner as well in order to improve the customer management, by learning from Gibus experience.
New 3d online configurator under development by Gibus can be adopted by Leiner as well to improve the online purchase experience for its customers.

# Preguntas
  • ¿Tiene la empresa pricing power?
  • Por un lado su posición dominante en Italia y su segmento de lujo parecen señalar que sí.
  • Por otro lado parece que en mercados extranjeros existen gran cantidad de competidores con productos de calidad semejante
  • ¿Qué le pasa a este sector durante las crisis?
  • Furniture and mattress purchases are tied to the health of the housing market, which often takes a financial blow during recessions. Werner notes, however, that furniture and mattress stores are among the first businesses to bounce back after a recession.

# Macro
## Factores Positivos
  • 🌎 El calentamiento global beneficia todos los accesorios de protección frente al sol
  • 🌎 Global outdoor furniture market CAGR of 5%

## Factores Negativos
  • Ingresos artificalmente altos en la época postcovid
  • Costes de ingresos afectados negativamente por el alza de las materias primas en la época de la guerra de Ucrania

# Business
The period 2015-2021 is characterized by the line of the Lusso High Tech (Pergole Bioclimatiche) and Sustainability (Zip Screen) lines, which have not registered a CAGR (Compounded Average Growth Rate) 2015-2021 respectively at +50.8% and + 23.1% constitutes the main driver of growth.

## High-end Luxury Line - (47% of sales)
### Luxury High Tech line - (34% of sales)
  • E-pergola: The first photovoltaic bioclimatic pergola (link)
### Sustainability Line - (14% of sales)
  • Zip Screen

## Design Line - (51% of sales)

# Oportunidades
  • 💡 Expansión internacional ⇾ Alemania y Francia
  • 💡 Sinergias y mejoras a raíz de la adquisición de Leiner -> Expansión de márgenes y crecimiento

# Ventajas
  • ✅ Top european player in the Outdoor Design sector by Revenue
  • ✅ Están recomprando sus propias acciones (1% de las acciones en circulación aprobado)
  • ✅ Empresa pequeña del mercado italiano. No aparece en muchas páginas de inversión y está fuera del alcance de muchos analistas.
  • ✅ La empresa es conocida por su alta calidad y su innovación

# Riesgos
  • ⚠️ 50% Invoice Discount are boosting sales. En caso de un cambio de política, las ventas en Italia podrían frenarse.
  • ✅ Debido a la dirección de la tendencia en energías renovables y el calentamiento global, parece poco probable que la política desaparezca repentinamente
  • ✅ La nueva adquisición aumenta la composición de revenue en mercados internacionales, haciendo a la empresa menos dependiente de las ventas locales -> 44% de los revenues son fuera de Italia (Enero 2023)
  • ⚠️ Afectada por el alza en precios de alguanas materias primas como la madera o el aluminio -> Alza en estas materias conllevará una reducción de márgenes
  • ⚠️ Los resultados de los años post-covid pueden estar hinchados por la vulta a la normalidad y a la vida exterior
  • ⚠️ Información limitada. Sólo hay reportes desde 2017
  • ⚠️ Terra Holding holds 80% of shares
  • ⚠️ Gibus carece de un gran foso defensivo en mercados internacionales. La competencia podría suponer problemas en un futuro.
  • Markilux (Alemania)
  • Verandalux (Francia)
  • Weinor (Alemania)
  • Fermob (Francia)
  • Sunair awnings (US) ?

# KPIs
  • La empresa debe mantenerse en una posición financiera sólida y crecer lentamente de manera orgánica (o adquisiciones si el management se muestra competente)
  • El porcentaje de los ingresos que vienen del sector de lujo debe aumentar o mantenerse
  • Hay que ver cómo evolucionan las ventas una vez se acabe el descuento del 50% en Italia.
post media
Bioclimatic Pergolas | Innovative solutions for solar protection system | Gibus
With Gibus high quality bioclimatic pergolas you'll enjoy your outdoor areas with at the best temperature, light and ventilation comfort. Take a look!

Looking at $GBUS 👀 currently trading at €14.80
🔹Boring Italian manufacturer of sun curtains and pergolas 🔅
🔹74MM MC
🔹No coverage (Unknown by the public)
🔹FCF Yield 23%
🔹Price near Net-Net Asset Value
🔹High ROIC
🔹15MM in Net Cash

#investing #microcap #stocks

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