PAX Global (0327.HK) (OTC:PXGYF) continues to disappoint. None of the major point-of-sale (POS) terminal providers have done particularly well since the time of my last update on this Chinese POS vendor, but PAX's 25% drop (the ADRs) is still notably worse than the 12% decline at VeriFone (NYSE:PAY), the 6% drop in the ADRs of Ingenico (OTCPK:INGIY), and the 1% rise in the local shares of Fujian Newland (000997.CH).
In the case of PAX, the company is getting squeezed by significant weakness in Brazil and a challenging (and perhaps changing) market in China while emerging growth opportunities in Europe and the U.S. are still much too small to offset those pressures. While I still believe that PAX Global can become a viable #3 in large markets like the U.S., the problems in China could be more structural and there's more risk now in what was already a high-risk story. My fair value has declined by only 10% since February, but I will be paying close attention to the upcoming first-half earnings report before deciding whether there is enough of a discount here to merit the risk.
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PAX Global Caught In An Uncomfortable Squeeze