Monday, June 1, 2015

Seeking Alpha: PAX Global Shooting Higher As It Unlocks Global Potential

Heavy is the head that wears the crown and both VeriFone (NYSE:PAY) and Ingenico (OTCPK:INGIY) may find that burden getting lighter in the years to come. Chinese rival PAX Global (OTC:PXGYF) (0327.HK) has built itself into the #2 player in China and is taking an increasingly large amount of share in major emerging markets like Brazil and Indonesia, while taking aim at the developed markets in Europe and North America.

Taking a winning formula in China and replicating it in the U.S. and EU isn't easy, but PAX Global has been investing the resources into product development and has several quality platforms to show for it. It's still an uphill climb, but the conversion to EMV-enabled terminals (as well as terminals capable of taking Apple Pay) could give the company an opportunity to disrupt these cornerstone markets.

There's nothing modest about the assumptions I use to value PAX Global, as annualized revenue growth of more than 16% over a decade leads to pretty significant market share and a mid-teens FCF margin assumes solid operating leverage. That said, PAX Global has yet to let me down in terms of operational or financial performance and this wouldn't be the first example of an industry significantly altered by a low-cost up-and-comer from China willing to put in the effort to develop quality products at lower prices.

Given that PAX's U.S. ADR listing is effectively theoretical, investors should look to buy the Hong Kong-traded shares. Most major brokerages now offer that service to investors and the commissions and fees are usually quite reasonable.

Read the full article here:
PAX Global Shooting Higher As It Unlocks Global Potential

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